Taiwanese media: TSMC’s 7nm capacity utilization rate has fallen below 50%

It is reported in the market that the capacity utilization rate of TSMC's 7-nanometer chip family has fallen below 50%, and Kaohsiung's 7-nanometer chip expansion plan has also been suspended.

According to Taiwan's "Electronic Times" report on Wednesday (November 9), there are many IC design customers who are currently vigorously cutting orders, delaying shipments, and adjusting TSMC's 7-nanometer chip orders. The ones with the greatest impact are MediaTek, Advanced Micro Devices (AMD), and Qualcomm. , Apple and Intel. Recently, industry sources said that among TSMC's top ten customers, MediaTek, AMD, NVIDIA, Marvell and STMicroelectronics have seen order cuts greater than expected and delayed delivery dates.

TSMC pointed out in a recent press conference that due to the weakness of end markets such as smartphones and computers, as well as delays in customer product progress, starting from the fourth quarter of last year, TSMC’s 7-nanometer and 6-nanometer capacity utilization will no longer be at the level it has been in the past three years. This situation is expected to continue into the first half of next year, as it will take several quarters for semiconductor supply chain inventories to rebalance to healthier levels.

According to reports, TSMC has previously adjusted its capital expenditures for the expansion of 7-nanometer and 6-nanometer chip production accordingly, including canceling the new 7/6-nanometer production line in Factory 22 due to uncertain market demand, and adjusting the construction time of the Kaohsiung 7-nanometer wafer fab. Procedure. TSMC believes that the decline in demand for 7-nanometer and 6-nanometer chip processes is more likely to be a cyclical phenomenon rather than a structural phenomenon. Therefore, 7-nanometer and 6-nanometer chip capacity utilization is expected to rebound in the second half of next year.

TSMC did not respond to a request for comment.

According to Zhongshi News Network, in response to TSMC’s suspension of its 7-nanometer fab expansion plan, Taiwan’s Minister of Economic Affairs Wang Meihua said on Wednesday (November 9) that she still needs to seek confirmation from TSMC, but she promised that TSMC’s Kaohsiung 7-nanometer fab will definitely If you can do it, it won't change.

She said that the decline in demand for consumer electronics products such as computers has indeed affected the demand for 7-nanometer chips. However, TSMC has not confirmed that the plan for the 7-nanometer factory will be withdrawn, but it may not be as urgent as it was originally.

According to the Wall Street Journal, people familiar with the plans revealed that Taiwan Semiconductor Manufacturing Co., Ltd., the world's largest chip foundry, is preparing to invest another tens of billions of dollars in a factory in Arizona.

Taiwan Semiconductor Manufacturing Co. plans to announce in the coming months that it will build an advanced semiconductor factory in north Phoenix, near another chip factory the company committed to building in 2020, according to people familiar with the expansion plans. The investment is expected to be as large as the $12 billion pledged two years ago, these people said.

The company's big bet on making chips in the United States comes after the U.S. government agreed to provide generous subsidies to semiconductor manufacturers to promote the reshoring of advanced manufacturing to the United States.

TSMC's new fab will produce so-called 3-nanometer transistors, the smallest and fastest transistors currently manufactured, these people said.

The expansion shows the chipmaker remains bullish on long-term demand prospects even as it faces market upheavals this year. The COVID-19 epidemic has prompted people to switch to working and studying from home, which has stimulated the consumption of various electronic products. The demand for chips has subsequently experienced two years of rapid growth. Now, the market demand for some chips has weakened. Many chip companies, including TSMC, have cut near-term capital spending plans and begun to control costs in response to the downturn.

Despite the bleak near-term industry outlook, chip industry executives still expect global sales to roughly double over the next decade to more than $1 trillion annually, which will support huge investments in manufacturing capacity. Their spending plans have also been boosted by incentives to build factories in the United States and Europe, which hope to shift the focus of the chip industry away from Asia.

Intel Corp and memory maker Micron Technology Inc are also trying to balance short-term savings with investments aimed at meeting long-term needs.

In addition to providing tax breaks for semiconductor manufacturing equipment, the United States has also allocated approximately US$39 billion for chip manufacturing this year, which is expected to be distributed starting next year. European countries will introduce incentives in the hope of doubling the continent's share of global production to 20% by 2030. Large chip factories typically take several years to build and install all the equipment, so companies need to make costly investment decisions well in advance if they want to meet future demand.

TSMC previously said it planned to hold a ceremony in Arizona in December to install the first batch of production equipment at the factory it announced two years ago. TSMC said at the time that it would produce 5-nanometer chips at the plant. According to people familiar with the matter, the factory's production capacity will also be increased compared with the original plan, and it is preparing to produce more advanced 4-nanometer chips at the factory. The factory is expected to start mass production in 2024.

TSMC did not respond to a request for comment.

Subsidies provided by European and American governments to chip manufacturers largely reflect the recognition by political leaders that semiconductors are not only important to national security and can be used in advanced weapons systems, but are also vital to daily life.

The United States and its allies are also increasingly concerned about the concentration of advanced process chip production in Taiwan, where TSMC is based. TSMC has been building state-of-the-art facilities in Taiwan but is also exploring production elsewhere, attracted in part by promised incentives there.

The company is considering expanding production facilities in Japan and is also considering spending billions to build a production facility in Singapore.