As 2024 nears, the Taiwanese semiconductor giant TSMC is poised to expand its clientele for its state-of-the-art 3nm process technology, known as 'N3E.' Initially exclusive to Apple, TSMC's innovative manufacturing process is now expected to attract additional major players in the tech industry. This expansion is set to significantly boost TSMC's production capabilities, with reports indicating a projected operational capacity increase to 80% by the second half of 2024.
TSMC has been primarily catering to Apple's demand with its 'N3B' process for 3nm chip orders. However, the high cost associated with this advanced technology, exemplified by the estimated $1 billion tape-out cost for Apple's M3, M3 Pro, and M3 Max chips, limited its adoption to financially robust entities like Apple. This cost barrier led competitors such as Qualcomm and MediaTek to initially opt for the 4nm process due to the more affordable wafer pricing.
The landscape is changing in 2024. TSMC's enhanced capacity for the 3nm process is expected to welcome new orders from other tech giants. Both Qualcomm and MediaTek are reported to launch their next-generation chipsets, the Snapdragon 8 Gen 4 and the Dimensity 9400, respectively, utilizing TSMC’s 3nm process. Apple is also anticipated to continue its partnership with TSMC for the upcoming 'A18' chips, intended for the iPhone 16 series, leveraging this advanced fabrication technology.
TSMC to increase production capacity in 2024
The increase in TSMC's client base is not just limited to smartphone processors. Apple's plan to extend its M3 chip line to more affordable Mac models represents a significant opportunity for TSMC to augment its operational capabilities further. Despite the expansion of its client roster, TSMC's relationship with Apple remains a cornerstone of its business. The orders for the M3 and A17 Pro chips alone have reportedly contributed $3.1 billion to TSMC’s revenue from 3nm chip orders.
Looking ahead, TSMC's maximum production capacity for the 3nm technology is expected to reach 100,000 wafers by the end of 2024. This growth aligns with the increasing demand and diversifying client list for TSMC's 3nm process. Despite a forecasted 10% reduction in annual revenue for the current year, TSMC's expanding operational capacity and diverse client base set the stage for a more robust financial performance in the upcoming quarters.