TSMC announced its third-quarter results, with revenue growth of 48%, net profit soaring by 80%, and net profit margin reaching an unprecedented 45.8%. Although the quarter's performance was astonishing, foreign media believe that this may also be its highlight moment, and its glory has ended here.
TSMC's performance growth this quarter was mainly due to Apple . Apple has handed over the A16 processor to TSMC for OEM since June. Industry insiders pointed out that although the A16 processor only adopts TSMC's N4 process improved from 5nm, its cost has still doubled, and TSMC has also obtained more OEM revenue, which has driven its performance growth.
However, TSMC's advanced processes are now facing a turning point. The 3nm process has no mass production due to no customers. There are even reports that TSMC has no choice but to convert the 3nm process production line to produce 5nm or N4 processes, hoping to obtain more revenue by increasing the production capacity of these mass-produced processes.
However, these mass-produced processes are now facing the problem of overcapacity. The current high capacity utilization rate of TSMC is that Apple's A16 processor is still at its peak in production. However, the stocking peak of iPhone 14 has basically ended this month. Generally speaking, the A16 processor used in the iPhone 14 has started production since June this year. The A16 processor in the fourth quarter of this year is estimated to have been completed. The sales volume of iPhone in the first quarter of next year and in the next few quarters is only about 60% of that in the fourth quarter, and the peak production of A16 processors has passed.
After Apple's A-series processor production peak ended in previous years, orders from chip companies such as American chip companies AMD, NVIDIA, Qualcomm , etc. can fill Apple's vacancy. However, AMD and NVIDIA have reportedly cut orders. Qualcomm's customers, Android mobile phone companies, have seen a significant decline this year, and Qualcomm is likely to cut orders, and TSMC's capacity utilization rate will inevitably decline.
In fact, even TSMC itself has a premonition that the capacity utilization rate in the fourth quarter of this year will decline. Therefore, Taiwanese media reported that TSMC will shut down some EUV lithography machines by the end of the year to reduce advanced production capacity and reduce costs. Analytical agencies believe that the global chip industry will decline by one quarter next year, which will cause a greater blow to TSMC.
With the decline of the global chip industry, global chips are now beginning to favor low-cost mature processes. Mature processes can meet most chip requirements. The industry believes that 28nm can meet 50% of chip demand, and 14nm can meet 70% of chip demand; and the chip stacking technology or chiplet packaging technology that has been adopted now can also improve mature process chips to performance close to advanced processes, enhancing the competitiveness of mature processes.
In this regard, it has become a competitive advantage of the chip industry in mainland China. Mainland China has mass-produced pure domestic 14nm process, supplemented by chip superposition technology, which can achieve 7nm performance, meeting 90% of domestic chip demand. For the 28nm process with a larger demand, , the largest chip foundry in mainland China, has invested 100 billion to expand. Relying on localization advantages, chip manufacturing in mainland China can seize more orders for mature processes.
TSMC has also realized the importance of mature processes and is planning to expand its 28nm production capacity in its factories in Taiwan and Nanjing, China. However, due to TSMC's previous approach to Huawei , mainland chips may trust local factories such as SMIC, and chips purchased by mainland China account for 60% of the global chip market. It can be expected that in this round of competition for mature process chips, TSMC will find it difficult to compete with mainland Chinese chip manufacturers.
This is no wonder foreign media believes that TSMC's highlight moment has passed, and even its largest customer, the American chip company, has asked TSMC to lower the foundry price. TSMC is finally feeling the bitter fruit of being subject to American chips, and everything it has done to mainland chip companies is still fresh in memory. Where will TSMC go in the future?
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