TSMC is in an embarrassing situation, with advanced technology blocked and pricing power in jeopardy
TSMC's dilemma, advanced processes are in surplus, and mainland chips are rushing to mature processes.
TSMC is the world's largest foundry and prides itself on its top-of-the-line process technology. Who would have thought that only eight years later, their 5nm process has already had overcapacity.
1) TSMC's dilemma of overcapacity in the process.
TSMC's 5nm process is known for its ultra-high manufacturing costs. This is so expensive that chip manufacturers take the ** factor as the primary consideration of the product. Especially now, as demand for the entire mobile computer market gradually cools, major chipmakers are also reducing their orders. As a result, even TSMC will inevitably have to pile up a bunch of chips in its warehouse. In Chinese mainland, companies such as SMIC have also recently announced 28nm process mass production plans, and launched a tug-of-war with TSMC, putting TSMC in a dilemma.
2) Analysis of the causes of the cooling of international chip demand.
In fact, for TSMC, this is also a big problem. In the past two years, the production and sales of both smartphones and laptops have declined sharply. Of course, the demand for high-end chips will also decline. In addition, new energy vehicle manufacturers will also choose cheaper and more mature chips to save costs. This undoubtedly makes Samsung a competitor to TSMC, which is also favored for its mature process technology.
3) TSMC re-plans the route for Chinese chip manufacturers.
Due to the lack of high-end processes, TSMC has shifted to expanding the capabilities of the 28nm process. The move puts it in direct competition with Chinese chipmakers, especially SMIC. According to reports, SMIC recently announced an investment of 50 billion yuan to expand the 28nm process production line. There is no doubt that this is a direct provocation against TSMC.
Why hasn't TSMC continued to expand its 5nm process capabilities to meet SMIC's challenges?
Answer: This is due to the high production cost of the 5nm process and the current decline in the overall demand of the international chip market, so it is difficult to find enough customers to digest the production capacity of the process. On the contrary, 28nm process technology is favored by consumers due to its low cost, which is the main reason for TSMC's transformation strategy.
Question 2: Is it possible for TSMC's old competitor Samsung to surpass TSMC?
A: For now, with Samsung's current mature process capabilities and technology, it has not yet been able to surpass TSMC in a short period of time. However, this is also an opportunity, as long as we grasp the market, grasp the needs of consumers, and invest more, Samsung is not impossible.
Question 3: What is the impact of SMIC's announcement on the expansion of the 28nm process on the company's development?
A: This shows that the micic process has shifted to a mature process and the capacity for mass production has been greatly improved. SMIC expects to achieve domestic substitution in more commercial areas, which will be critical for the company's future growth.
Some people believe that TSMC is the industry leader, and its technological advantages are undoubted, and the current predicament is only temporary, and in the long run, it will get better one day. However, some people see SMIC's move as a provocation to TSMC, because China's chip power is growing rapidly, making traditional semiconductor giants wary. Some people also pointed out that this is actually a rare adjustment, which will help break the long-standing monopoly between TSMC and Samsung, and allow more chip manufacturers of all sizes and types to emerge.
In the eyes of the industry, TSMC's process surplus and SMIC's 28nm process capacity expansion reflect a major shift in the global chip industry. In the context of declining overall demand, mature technology has attracted much attention because of its cost advantages, and the potential of the low-end market has been gradually tapped, which will promote the development of the industrial chain to diversification and division of labor. At the same time, Chinese enterprises have also taken this opportunity to accelerate the pace of catching up, accelerate the accumulation of technology, and accelerate the layout of production capacity. Although the production of high-end chips is still monopolized by TSMC, latecomers like SMIC are looking for a new way out and launching a strong blow to traditional leading companies. In the long run, this trend is expected to continue, and new changes will emerge.
TSMC's current predicament once again shows that in the rapidly changing market and technology environment, no company can only seek temporary benefits and ignore the catch-up of future competitors. We have every reason to believe that with the continuous enhancement of the power of Chinese enterprises, there will be a new change in the entire chip industry. Of course, it depends.