TSMC's 3nm and 5nm processes are expected to bring up to 1 trillion New Taiwan Dollars in revenue to this Taiwanese giant, exceeding industry expectations.
There is no denying that TSMC has been in the leading position in the industry in terms of process adoption and the revenue of this Taiwanese giant in the past several quarters. With the rise of the AI hype and companies like Apple preparing their next - generation product lineups, the demand for TSMC has increased significantly, especially for its 3nm and 5nm processes. This is why we previously reported how this Taiwanese giant is considering a large - scale increase in the prices of 3nm/5nm to take advantage of the market demand.
According to the Electronic Times, TSMC is expected to generate about 1 trillion New Taiwan Dollars or 310 billion US dollars in revenue just from its two high - end semiconductor nodes, thanks to the huge demand the company will face in the next quarter.
The above figures are the total revenue for only three quarters. TSMC's revenue in the second quarter of 2024 showed a parabolic growth, reaching 336.7 billion New Taiwan Dollars, accounting for about 40% of the total revenue from the first to the third quarter. The amazing data in the second quarter is entirely due to how this Taiwanese giant has taken advantage of the AI hype.
The report pointed out that among the main sales contributors, the manufacturing quotation for the 3nm series is close to $20,000 per wafer, accounting for 15% of the total sales of the wafer factory in the second quarter, that is, 101 billion New Taiwan Dollars, while the 5/4nm series accounts for 35%, that is, 235.7 billion New Taiwan Dollars.
In the first quarter, the 3nm and 5nm series accounted for 9% and 37% of the overall sales respectively. TSMC expects its sales in the third quarter of 2024 to reach 754 billion New Taiwan Dollars, of which at least 50% will come from the 3nm and 5nm series.
Equipment supply chain sources pointed out that the increase in sales and profits has provided capital expenditure support for TSMC's capacity expansion and node advancement. The sources added that so far, only TSMC has been able to obtain returns from the large investment in 3/5nm processes.
Entering the next quarter, TSMC is expected to generate 754 billion New Taiwan Dollars or about 230 billion US dollars in revenue, mainly from its mainstream 3nm and 5nm products. It is reported that the main customers this time are NVIDIA and Apple. The latter is preparing for the release of the next - generation iPhone 16 series, which is likely to adopt TSMC's 3nm node. For NVIDIA, the production of Blackwell has started. Considering that the Green Team uses TSMC to meet its main semiconductor requirements, this Taiwanese giant will have a gold rush in the next quarter.
Currently, the semiconductor industry is inclined towards TSMC because Intel and Samsung have nowhere to go, especially in terms of semiconductor market share. It is said that TSMC will increase its R & D expenditure in the future. If the situation continues to develop as it is currently, the company will dominate the upcoming processes, including 2nm.
TSMC Is About to Increase the Prices of 3nm and 5nm
According to an earlier report by wccftech, the leading semiconductor foundry TSMC is preparing to increase the prices of its 3nm and 5nm processes. It is reported that this move is aimed at maintaining its long - term gross profit margin of 53% and ensuring its leadership in the semiconductor foundry market.
The report pointed out that considering the strong demand for AI, plus the consumer product orders from IC design companies such as Apple and Qualcomm, TSMC's production capacity is still tight.
Therefore, it is reported that TSMC plans to increase the prices of advanced processes such as 3nm and 5nm by 8% to ensure long - term stable profit margins. It is worth noting that earlier, a report in the Commercial Times quoted sources as saying that NVIDIA CEO Jensen Huang agreed that TSMC's pricing was too low and would support its price increase action.
Although the rumor of price increase has been going on for some time, the sources cited by wccftech said that TSMC may implement the price increase soon.
Currently, the utilization rates of TSMC's 3nm and 5nm processes have both reached 100%, indicating that TSMC has completely dominated the market in these two processes. This has already enabled TSMC to obtain considerable profits, and this price increase will further benefit TSMC's operations.
In addition to the advanced processes, there are rumors that TSMC has also increased the price of CoWoS packaging due to the demand for AI chips from large factories such as AMD and NVIDIA. Although specific figures have not been disclosed yet, TSMC has rapidly expanded the CoWoS production line, making the possibility of a price increase not large.
The sources cited in the MoneyDJ report previously estimated that TSMC's CoWoS production capacity is still in short supply. This year, the monthly production capacity is 35,000 - 40,000 wafers. With additional outsourcing capacity, the production volume next year may reach more than 65,000 wafers per month, or even higher.
Customers Have Booked Production Capacity Until 2026
In June this year, Taiwanese media reported that AI servers, high - performance computing (HPC) applications, and the AI - ization of high - end smartphones have continuously increased the silicon content in semiconductors. Four major factories, including Apple, Qualcomm, NVIDIA, and AMD, are reported to have massively booked the production capacity of TSMC's 3 - nanometer family processes, and a customer queuing tide has emerged, queuing all the way to 2026.
TSMC has always refrained from commenting on information about individual customers. As for whether the price will be increased due to the hot demand for production capacity to reflect the value, TSMC emphasized that "the pricing strategy has always been strategy - oriented rather than opportunity - oriented, and we will continue to work closely with customers to provide value."
Industry insiders analyzed that TSMC is not a company that will increase prices casually. Reflecting value cannot be directly equated with price increase. Even if the company has the leading advantage in advanced processes, there are many ways to reflect value to customers.
TSMC's 3 - nanometer family members include N3, N3E, N3P, as well as N3X, N3A, etc. While the existing N3 technology is continuously upgraded, N3E entered mass production in the fourth quarter of last year, aiming at applications such as AI accelerators, high - end smartphones, and data centers.
N3P is scheduled to enter mass production in the second half of this year, and it is estimated that it will become the mainstream application for mobile devices, consumer products, base stations, and even network communications in 2026; N3X and N3A are customized for high - performance computing and automotive customers.
The industry believes that with customers scrambling to reserve production capacity, the production capacity of TSMC's 3 - nanometer family will continue to be tight, which will become the normal situation in the past two years. The relevant orders do not yet include the outsourcing needs of Intel's central processing unit (CPU).
Since the production capacity of the 3 - nanometer family has been booked by customers this year and next year, TSMC's planned relevant production capacity this year, which is three times that of last year, is still not enough.
To ensure the production and supply without worry in the next two years, the company has successively taken a number of measures to expand more production capacity. It has been previously announced at the financial report conference that in view of the strong demand, the company's strategy is to convert some 5 - nanometer equipment to support the 3 - nanometer production capacity. The industry has revealed that the total production capacity of TSMC's 3 - nanometer family is continuously increasing, and it is estimated that the monthly production capacity is expected to increase to 120,000 - 180,000 wafers.
It is reported that the main sources of orders for TSMC's 3 - nanometer family include four major customers: Apple, Qualcomm, NVIDIA, and AMD. For Apple, the iPhone 16 series new machines are expected to be launched as soon as September. It is expected to be the first iPhone with AI functions, which will help stimulate a new wave of fan replacement. Generally, it is expected that the stocking volume of the new iPhone 16 series this year is expected to increase by 5% annually, reaching 92 - 95 million units. TSMC is the exclusive supplier of the A - series processors for the new machines, and the relevant orders will become the largest outlet for the 3 - nanometer family.
TSMC Continues to Increase Production Capacity
According to industry insiders, in the second half of this year, TSMC's monthly production of 3nm chips will increase from the current 100,000 wafers to 125,000 wafers.
The increase in production is the result of the rapid expansion of the product line by this pure wafer foundry... According to industry insiders, in the second half of this year, TSMC's monthly production of 3nm chips will increase from the current 100,000 wafers to 125,000 wafers. The increase in production is the result of the rapid expansion of production capacity by this pure wafer foundry to meet the needs of major customers such as Apple, Intel, Qualcomm, and MediaTek.
According to sources from semiconductor equipment companies, the production capacities of TSMC's 5nm and 3nm processes have been fully utilized, especially the 3nm production capacity has been in short supply.
In addition, the sources pointed out that TSMC's 2nm wafer factories in the Hsinchu Science Park in northern Taiwan and Kaohsiung in southern Taiwan are moving towards mass production. The foundry is expected to start mass production of the 2nm process technology from the fourth quarter of 2025, with a target monthly production capacity of 30,000 wafers.
Industry insiders expect that after the Kaohsiung factory is put into production, TSMC's monthly 2nm wafer production capacity will reach 120,000 - 130,000 wafers, and the introduction of the N2 technology is expected to increase TSMC's highest foundry quotation from $19,000 - $21,000 per wafer for the 3nm process to $25,000 - $26,000 per wafer for the 2nm process.
2nm Is Coming. Industry insiders further pointed out that the manufacturing of TSMC's 2nm process will mainly be carried out in its wafer factories located in Baoshan New Area and Kaohsiung New Area in Taiwan.
TSMC said that the development of its N2 technology is progressing as planned and smoothly. The N2 technology is the company's first - generation nanosheet transistor technology, achieving a full - node leap in performance and power consumption. The expected mass production time is 2025.
The sources said that TSMC will also launch a back - side power rail solution suitable for HPC applications in the second half of 2025 and start mass production in 2026.
Apple's iPhone was once the first product to adopt TSMC's most advanced process technology for mass production, but the sources said that with the launch of TSMC's 2nm process, in addition to the iPhone, other Apple devices will also be the first to adopt this advanced technology.
In addition, TSMC's capacity expansion at home and abroad is also steadily advancing, with strong demand for equipment and materials. It has also used its bargaining advantage to gradually expand the momentum of placing orders. Many large factories, including ASML, Applied Materials, and Tokyo Electron, have obtained large orders from TSMC and will start shipping within the next three years.
In terms of advanced packaging, the sources revealed that TSMC will also continue to expand production until 2028 and has accelerated the pace of relevant equipment orders.
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