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7nm is one of TSMC's most profitable chip processes, and at its peak, it contributed nearly half of its revenue together with 5nm. In the third quarter of last year, TSMC also contributed 23% of its revenue, but in the third quarter, the proportion of revenue fell to 17%.
On the other hand, 28nm in the mature chip market continues to usher in demand growth. I guess SMIC didn't expect it either!TSMC officially announced that no one wants 7nm from foreign media
The 7nm process has a high market demand. With the rapid development of mobile devices, cloud computing, artificial intelligence, and other fields, the demand for high-performance chips is increasing. The 7nm process can meet the needs of low-power and high-performance chips in these fields, so it has attracted widespread attention from the market.
Especially from 2021 to 2022, the demand for 7nm chips has exploded, and a large number of chip giants such as Qualcomm, Apple, MediaTek, NVIDIA, and AMD have submitted orders for 7nm chips to TSMC.
When production capacity was in the tightest supply, TSMC even appropriated other production lines to produce 7nm, and once announced that it would invest $100 billion to expand chip production capacity. However, the demand for 7nm chips comes and goes quickly.
In the third quarter of this year, TSMC's 7nm capacity utilization rate continued to decline, contributing 17% of revenue, and in the second quarter of this year and the second quarter of last year, 7nm revenue accounted for 23% and 26% respectively. It can be seen that this chip process, which is very optimistic about TSMC, is not so popular, how to solve this problem?
TSMC's approach is to cut prices. TSMC officially announced that it will reduce the price of 7nm, with a reduction of about 5%-10%. TSMC is also expected to reduce the price of mature processes next year, with a reduction of 2%-5%. The more advanced 7nm has dropped more, and foreign media commented: 7nm no one wants.
Why is the very favored 7nm cold in the market?This is mainly due to the sharp decline in shipments in the mobile phone market, and customer demand has begun to focus on 5nm. Flagship mobile phones on the market generally use the 5nm process, and the more advanced ones are 4nm, and a large number of 3nm chips will be shipped next year.
7nm is in an awkward position, neither lagging behind nor so high-end, and is naturally not favored.
7nm is not a panacea, and TSMC, the most profitable process technology, has faced capacity utilization**, customer order cuts, etc. Although the more advanced 5nm also has a good demand, the application range is generally concentrated in the field of consumer electronics. On the contrary, the inconspicuous mature chips are ushering in a surge in demand.
According to a research report by market research agency Trendforce, it is expected that by 2027, the mature process production capacity in Chinese mainland will account for 39%.
The demand for mature chip manufacturing processes cannot be underestimated, and the communication industry needs mature process chips to support mobile communication networks, wireless communication equipment, and base stations. Automotive electronic control units (ECUs), driver assistance systems, and in-vehicle entertainment systems in the automotive industry all require mature process chips to achieve various functions.
If the proportion of mature chip production capacity can really reach 39% in the future, a large number of mature chip manufacturers can get good business opportunities. SMIC also did not expect that the market prospect of mature chips was greater than imagined.
TSMC is also increasing its layout in the field of mature chips, and its Nanjing factory in mainland China has been expanding its mature chip production capacity.
The opportunity is just around the corner, and I hope that SMIC and other domestic manufacturers will continue to step up their layout and strive for more opportunities.
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