Monday, October 23, 2017
Taiwan Semiconductor Manufacturing Co. (TSMC) expects demand for its 10nm products to soar this year while its largest customer, Apple, ramps up production of the iPhone X.
“We expect the N10 (TSMC’s designation for 10nm) to contribute about 10 percent of our full-year 2017 wafer revenue,” TSMC Co-CEO CC Wei said at an event in Taipei to announce the company’s third-quarter revenue. The outlook for the world’s biggest foundry has improved from three months ago, when the company said it expected 10nm sales to account for 10 percent of its second-half revenue.
Based on the latest forecast, TSMC would log $3.2 billion from sales of 10nm chips in 2017. The company started 10nm production in the second quarter of this year, lagging its largest foundry rival, Samsung, by about four months. TSMC has become the sole supplier of Apple’s application processors after snatching the business away from Samsung.
Some analysts had concerns about whether 10nm demand might plunge early next year, however.
“For the fourth quarter, 10nm will be about 25 percent of your total revenue,” Citigroup analyst Roland Shu said to the TSMC executives at the Taipei event. “With this high figure for the fourth quarter, are you worried about the first quarter of next year?”
Shu’s calculation “is quite close to the number we have,” Wei replied. “In smartphones, there is that seasonality. We don’t know the impact yet, but our customer is working on migration to the next node. That will ramp up in the second half of next year.”
TSMC said its annual sales growth should reach 8.8 percent in 2017, better than the company’s previous forecasts.
TSMC is increasing its capital expenditure budget for this year to $10.8 billion from an earlier forecast of $10 billion as the company accelerates its buildup of 7nm capacity. The company expects a fast ramp of 7nm in 2018. For the next few years, TSMC forecast its annual capex budget to be about $10 billion.
The company has transferred 7nm from R&D to manufacturing. The first 7nm chips to be made during the first half of 2018 will be high-end application processors and SoCs for high-performance computing, according to Co-CEO Wei. The company expects more than 50 tapeouts at that node by the end of 2018, he said.
The company will also start risk production of its derivative N7+ during 2018. Compared with the earlier N7, the N7+ will have a 20 percent area reduction and a 10 percent speed improvement. The company will use EUV for production at the N7+ node, according to Wei.
That shift to EUV may present some difficulties for customers migrating from N7 to N7+.
“We are going to use a few layers of EUV in N7+,” Wei said. “If you are talking about the N7 product, customers will need to re-tapeout for the N7+ to get the benefits.”
A lot of the same design rules will be used in the N7 and the N7+, so customers will not need to spend all of their resources designing for a new node, he said.
The company said it is on track to start volume production of 5nm chips in 2020. Co-CEO Mark Liu pledged that the company’s 5nm products will have the best power efficiency in the industry.
In the meantime, the company continues to defend its approximate 90 percent share in the legacy 28nm node. About 23 percent of TSMC’s third-quarter revenue came from 28nm products, and the company had its highest number of tapeouts at that node during the period, according to Wei.
“We will continue to maintain our high market share in 28nm next year,” Wei predicted.
Looking ahead to new business areas, TSMC said it expects to double its automotive business in the next five years from about $1.5 billion this year. The company also noted that it had about $400 million in revenue from a chainblock application for cryptocurrency mining. TSMC said the customer designed its own “powerful” chip. While the business is relatively small, the company noted that it has grown rapidly.
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