Compared to the same period last year, fourth-quarter revenue increased 42.8% year-over-year, while net income and diluted earnings per share both increased 78.0%. Compared to the third quarter of 2022, fourth-quarter revenue increased 2.0 percent sequentially and net income increased 5.4 percent.

On a U.S. dollar basis, fourth-quarter revenue was $19.93 billion (currently approximately RMB134.926 billion), up 26.7 percent year-over-year but down 1.5 percent sequentially. The gross margin for the fourth quarter was 62.2 percent, the operating margin was 52.0 percent and net margin was 47.3 percent.

TSMC said 5nm shipments accounted for 32% of total wafer revenue in the fourth quarter, and 7nm accounted for 22%. Taken together, 7nm and more advanced technologies accounted for 54% of total wafer revenue.

TSMC’s operating income from January to December 2022 will be NT$2,263.89 billion (currently approximately RMB 502.584 billion), a year-on-year increase of 42.6%.

TSMC expects first-quarter sales of US$16.7 billion to US$17.5 billion, which is currently about 113.059 billion to 118.475 billion yuan.

According to a previous report by the Taiwan Economic Daily, the supply chain is rumored that TSMC is driven by the three major driving forces of advanced process expansion in Taiwan, investment in R&D, US and Japan expansion, and mature process upgrades due to the growing needs of the next three years. Expenditure is expected to approach 40 billion U.S. dollars (currently about 276.8 billion yuan), a new high.

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TSMC’s new Arizona plant is scheduled to open in April 2021 and is expected to hold an equipment arrival event on the 6th of this month. A TSMC document states that the new plant is expected to be commercialized in December 2023.

In this public document, TSMC first proposed a staffing plan for the new U.S. plant. Arizona currently has about 1,000 employees and expatriates, which will increase to 2,000 in 2023.

TSMC’s new plant is planned to produce semiconductor chips with 5nm process technology and a monthly capacity of 20,000 wafers, creating more than 1,600 professional jobs, according to the Taiwanese media. The new Arizona plant will be TSMC’s largest and most advanced production base in the United States.

In addition, TSMC says a large portion of its 70,000 employees worldwide are trained engineers with STEM (Science, Technology, Engineering and Mathematics) related degrees.

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And, a new report says that about a third of the plant’s capacity will be used for Apple. The plant’s previous capacity was said to be about 20,000 full wafers, and the report also says that number could increase over time.
The plan is expected to be fully disclosed on Dec. 6. Tech luminaries including Apple CEO Tim Cook, Nvidia CEO Jen-Hsun Huang and AMD CEO Lisa Su are expected to be on hand. President Joe Biden, and Commerce Secretary Gina Raimondo are also said to be in attendance, according to a Bloomberg report Thursday night.

“We’ve made a decision to buy out capacity from a plant in Arizona, which opens in 2024, so we’ve got about two years on this, maybe a little less,” Cook reportedly said at a conference in Europe in October.” In Europe, I’m sure that as these plans become more apparent, we will also source from Europe if necessary.”

TSMC’s chip manufacturing facility in Arizona begins construction in June 2021. The company initially expected to start production in September 2022, but the schedule was pushed back by about six months – a delay that pushed full chip manufacturing to 2024.

Arizona’s labor pool also reportedly poses a challenge for TSMC. Intel already employs 12,000 people and is seeking to hire another 3,000 for its expanded facility. TSMC will have to compete in an area where unemployment is already low and the availability of clean water may also be an issue when it comes to finding talent for its new plant.

TSMC seems skeptical about the level of success it can achieve in the United States. And, chips purchased from TSMC Arizona will still have to be shipped to China or India for iPhone production if Apple is to keep the current locations for iPhone production intact. A shift to U.S.-based iPhone production by 2024 seems unlikely.

In July, TSMC’s stock fell 35 percent for the year. By Sept. 30, it was down 41 percent. on Nov. 3, it reached its 2022 low, down 49 percent for the year.

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Electronic Time’s latest report shows that TSMC fab overall capacity utilization, in the first half of next year is expected to fall to 80%, of which 7nm and 6nm process capacity utilization will decline significantly, 5nm and 4nm process capacity utilization, is expected to decline from January next year onwards.

If TSMC’s overall capacity utilization declines in the first half of next year as reported, especially for the 7nm, 6nm, 5nm and 4nm processes that contribute half of their revenue, it will cause their revenue to decline significantly.

In addition, as TSMC is currently the world’s largest foundry, with a much higher market share than other manufacturers and a large customer base, if their capacity utilization rate declines, the probability means that the capacity utilization rate of other manufacturers will not be optimistic.

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Judging from TSMC’s financial report, in addition to the significant year-on-year increase in revenue and net profit, the quarterly revenue of their 5nm process also exceeded 7nm for the first time in this quarter, becoming their largest source of revenue.

TSMC disclosed in its financial report that in their third-quarter wafer foundry revenue, 5nm process contributed 28%, 7nm accounted for 26%, 16nm accounted for 12%, 28nm process accounted for 10%, 40/45nm accounted for 7%, 65nm accounted for 7% And 90nm accounted for 5%, 2%, and other processes accounted for 10%.

In the last quarter, the 7nm process accounted for 30% of revenue, which was 9 percentage points higher than the 21% of the 5nm process.

The proportion of TSMC’s 5nm process technology in revenue is 2 percentage points higher than that of 7nm, which means that the 5nm process technology that has been in production for more than two years has replaced 7nm and has become their largest source of revenue.

TSMC’s 5nm process technology started risk trial production in the first quarter of 2019, and mass production began in the first quarter of 2020. It began to bring revenue to them in the third quarter of 2020, and contributed 8% of all revenue in the quarter. %.

Regarding the 5nm process technology, Huang Renzhao, vice president and CFO of TSMC, said in the financial report that their business in the third quarter was supported by the strong demand for the industry-leading 5nm process technology. Entering the fourth quarter, although the end market demand weakened, they expected their business Business will be flat and the impact of ongoing inventory adjustments by customers will be offset by their continued leadership of the 5nm process.

According to foreign media reports, the main customer of TSMC’s 5nm process technology in the early stage of mass production is Apple, and Apple also occupies a considerable proportion. As more customers turn to this advanced process technology, the 5nm process is in their revenue. The proportion will be higher, and like 7nm, it will be their largest revenue source for several consecutive quarters.

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AMD’s response is no. CEO Su Zifeng has confirmed in an interview before that this time AMD has greatly increased its production capacity in wafers, substrates and back-end. With the launch of Zen4, it is expected that there will be no supply constraints. The problem.

Why does AMD dare to slap the chest this time to ensure that it will not be out of stock? In fact, it has a great relationship with TSMC, because the times have changed. In the past two years, there was a shortage of chip production capacity. However, in the second half of this year, the market demand was insufficient, and the chip production capacity increased significantly. TSMC is now worried about the 5nm capacity utilization rate.

Sources from the supply chain said that due to the decline in the utilization rate of 5nm chips, TSMC had to consider closing some EUV lithography machines. The company has a total of about 80 EUV lithography machines and plans to close 4 of them by the end of this year. After all, EUV light The engraving machine consumes 30,000 kWh of electricity per day, and the operating cost is very high.

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However, TSMC has grabbed the main customers does not mean that there is no hidden worry, originally Intel is also one of the two major customers of TSMC 3nm debut, but not long ago there was news that Intel canceled the order, 14 generations of Core on the GPU module using the 5nm process, did not use TSMC 3nm process.

However, the fact that TSMC has grabbed major customers does not mean that there are no worries. Originally, Intel was also one of the two major customers of TSMC’s 3nm launch. However, it was reported not long ago that Intel canceled the order, and the GPU module on the 14th generation Core uses a 5nm process. , did not use TSMC’s 3nm process.

Now, Apple, the only customer of TSMC’s 3nm process, has also been shaken. A source from the industry chain @Mobile Chip Daren broke the news that TSMC’s N3 process has been abandoned internally, because customers don’t need it, and Apple has also given up.

But N3 process was abandoned, which does not mean that TSMC’s 3nm process is finished, in fact, N3 is only the first generation of the 3nm process, compared to the N5 process power consumption can be reduced by about 25-30%, performance can be improved by 10-15%, transistor density increased by about 70%.

However, the N3 process has a narrow range of applications and is only suitable for manufacturing specific products for early customers with superb investment capabilities and the pursuit of new processes.

In short, the initial generation of N3 process performance and density is very good, but too expensive, only suitable for the dirt-cheap customers willing to burn money, such as Apple, Intel, the results of these two have not been used.

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Intel recently announced the architecture details of the 14th generation Core at the hotchips conference. CPU Tile module is produced by Intel 4 process, which is Intel’s first EUV process, IOE Tile and SoC Tile are produced by TSMC’s 6nm process, and Graphics Tile, which is the previously mentioned GPU module, is based on TSMC’s 5nm process.

There is also an intermediary layer, which is produced using Intel’s 22nm process.

Thus, it seems that without considering the intermediary layer, three of the four core units of the 14th generation Core are produced by TSMC, and the part produced by Intel itself only accounts for 1/4.

Such cooperation is beneficial to Intel and TSMC, Intel can quickly expand production capacity, but also reduce costs, TSMC is gaining important orders, 5nm and 6nm production capacity is not worried about excess.

However, for AMD, Intel joined the ranks of the 5nm capacity is not necessarily a good thing, Intel still holds 3/4 of the world’s x86 share, the annual sales are still much higher than AMD, TSMC will inevitably tilt to Intel’s capacity.

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In a tweet, Kuo said that the new MacBook Pro models 14-inch and 16-inch will likely still feature chips based on TSMC’s latest 5nm process, given that TSMC’s guidance indicates that revenue from 3nm chip production won’t begin until 2023.

Ming-Chi Kuo’s information appears to conflict with a report from Taiwan media that the M2 Pro chip could be Apple’s first 3nm chip, and Digitimes reports that TSMC plans to start mass production of 3nm chips later this year for upcoming MacBook models and other products.

TSMC’s plan to start producing 3nm chips for Apple in the near future should be a solid one, but it depends on which new Mac models are used first. Bloomberg’s Mark Gurman says Apple is working on MacBook Pro, Mac mini and Mac Pro models based on the M2 chip.

The current MacBook Pro 14-inch and 16-inch models, which were released in October 2021, use the 5nm-based M1 Pro and M1 Max chips.

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The company’s main production base for TSMC’s 3nm process — Wafer Fab 18

The company is expected to enter mass production in September, and the initial yield performance will be better than that of the previous 5nm (N5) process.

TSMC’s president and co-chief executive officer, Chieh-Chih Wei, has also previously stated that TSMC’s N3 process is progressing as expected and will be in mass production with good yields in the second half of 2022. Driven by HPC (High-Performance Computer Cluster) and smartphone-related applications, the N3 process will be in stable volume production in 2023 and will start contributing to revenue in the first half of 2023.

The N3E (3nm Enhanced) process will be an extension of TSMC’s 3nm family, with better performance, power consumption and yield, and will provide a complete support platform for smartphones and HPC-related applications in the 3nm process era.

At the end of July, Samsung announced that it had mass-produced the 3nm process, the industry’s first semiconductor company to use a full surround gate transistor architecture, but some experts revealed that in the use of the 3nm process foundry, Samsung Electronics’ current main task is still to improve the yield rate.

According to the Business Times, TSMC 3nm still uses the FinFET architecture, but the N3 process has adopted the innovative TSMC FINFLEX technology, the 3nm family of technologies to further enhance the PPA (performance, power efficiency and density).

TSMC also said at the 2022 Technology Symposium that when 3nm process technology is launched, it will be the most advanced technology in the industry in terms of PPA and transistor technology, and that it is confident that the 3nm family will become another large-scale and long-term demand process node for TSMC.

In addition, the Business Times previously reported that industry sources said that Apple will be the first customer to adopt TSMC’s 3nm chips at the end of this year, and the first product may be the M2 Pro chip (or will be used in new products such as the Mac Pro), while next year, including the new iPhone 15 Pro dedicated A17 application chip, as well as the M2 and M3 series chips, will be imported into TSMC 3nm.

At the same time, Intel will also expand the use of 3nm production processor chip block (tiles) in the second half of next year, AMD, Nvidia, Qualcomm, MediaTek, Broadcom, etc. will gradually complete 3nm chip design and start mass production in 2023-2024.

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