TSMC announced the mass production of 3nm two days before the end of 2022. Its chairman Liu Deyin said that he is not worried about customers. The industry generally believes that the first 3nm process customer should be Apple. However, even Apple is not full of confidence in 3nm

TSMC announced the mass production of 3nm two days before the end of 2022. Its chairman Liu Deyin said that it is not worried about customers. The industry generally believes that the first 3nm process customer should be Apple. However, even Apple is not full of confidence in 3nm, which is in sharp contrast to TSMC's attitude.

Industry insiders pointed out that the processor produced by Apple using TSMC's 3nm process should be the A17 processor. Previous rumors that Apple may use 3nm process to produce the M3 processor may not become a reality because the cost of the 3nm process is too high and is unbearable for Apple.

TSMC's 3nm process was originally planned for mass production in the third quarter of last year, but the performance of the A16 processor that TSMC trial-produced at that time was not up to standard, and Apple was not satisfied. Therefore, the A16 processor used the N4 process, an improved process of the 5nm process, instead of the 3nm process. Later, TSMC further improved the 3nm process. It is estimated that the 3nm process that TSMC currently announced for mass production should be the N3E process.

TSMC CEO Liu Deyin said that the logic density of the 3nm process increased by 60% and the power consumption was reduced by 30%-35%. However, this is only TSMC's side of the story. The actual situation will not be known until the A17 processor is mass-produced. The previous N4 process was also promoted to have an 11% improvement. The A16 processor produced with the N4 process claimed to have improved performance by 15%. However, the actual measurement of the iPhone 14 Pro only improved by about 10%.

Although TSMC has announced mass production of the 3nm process, Taiwanese media pointed out that the current 3nm process is still improving the yield. If it is used to produce A17 processors, it means that TSMC will have to spend at least half a year improving the yield level, showing that the mass production of the 3nm process still faces difficulties.

Although TSMC claims that it is not worried about customers, the only confirmed customer is Apple, and the industry expects iPhone15 to continue the strategy of iPhone14, that is, only the high-end iPhone15Pro and iPhone15Pro max use A17 processors, while iPhone15 and iPhone15plus will continue to use A16 processors. Therefore, the order volume of A17 processors will also be less than that of A15 processors. The previous iPhone13 series all use A15 processors.

Apple did this because the cost of advanced processes has surged. The N4 process used in the A16 processor is an improvement from the 5nm process, and the cost increase is relatively large. The 3nm process is a completely new and upgraded process, and the chip design cost is expected to double compared with 5nm. The cost of wafer will increase by 25%. TSMC believes that costs have increased and asked Apple to share the costs, but Apple has refused.

Apple also has its reasons for refusing to increase prices, that is, the 2022 iPhone 14 Pro uses the higher-cost A16 processor. However, due to concerns about sales, the starting price has not increased. Then, just over a month after the iPhone 14 Pro was launched, it could only reduce the price by 600 yuan during the Double Eleven promotion. It can be seen that the market is indeed unable to accept the expensive iPhone . Consumers do not accept the price increase, and Apple is certainly unwilling to increase the price.

In fact, not only Apple is facing cost pressure, but all mobile phone companies are under pressure due to the decline of global mobile phones. It has been recently reported that another customer of TSMC, and Qualcomm , will also lower the prices of mid-range and low-end chips to win support for Chinese mobile phones. American analog chip and radio frequency chip companies have already experienced inventory problems in the first half of 2022 and were forced to cut prices by 90%. It can be seen that American chips are now generally under performance pressure.

U.S. chips are TSMC's main customer, contributing nearly 70% of TSMC's revenue. U.S. chips are generally unwilling to increase prices and even demand price cuts. TSMC hopes that U.S. chips will share costs, which is easier said than done. Now perhaps TSMC has begun to miss a certain Chinese technology company that once contributed 14% of its revenue. At that time, due to the checks and balances of this Chinese technology company, TSMC gained bargaining power and continued to increase prices.

Faced with such a situation, TSMC now seems to have begun to realize the role of Chinese chips. While TSMC is building 5nm and 3nm factories in the United States, it is also expanding its 28nm process production capacity in mainland China. There is no doubt that They just hope to get more revenue from the Chinese market, check and balance American chips, and ensure their own bargaining power. However, the significance of 28nm to Chinese chips is limited. After all, chip manufacturing companies in mainland China have mass-produced 14nm, and TSMC's 28nm is not competitive. TSMC may only continue to be controlled by American chips.