TSMC Poised To Begin 3nm Production Despite Weaker Chip Demand

Taiwanese chip giant TSMC is to begin volume production of 3nm silicon within weeks, amid warnings that demand for semiconductors is weakening with Korean companies reporting the first drop in shipments for three years.

TSMC has revealed that its production of 3nm semiconductors is due to start in September, as indicated by various reports. The company's CEO, CC Wei, announced this to attendees at a technology forum in Hsinchu this week, according to Nikkei Asia, which added that he also said inflation and ongoing supply chain difficulties were impacting TSMC's ability to build new fabrication plants.

However, despite these hurdles, the company said it is now building at least five factories a year, whereas it only built an average of two annually between 2017 and 2019.

Construction work on a TSMC fabrication plant in Arizona that will manufacture 5nm-process chips was recently completed, although this is not scheduled to begin semiconductor production until 2024.

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TSMC's 3nm technology (N3) is claimed by the company to offer up to a 70 percent increase in logic density compared with the existing 5nm (N5) process, with a speed improvement of up to 15 percent at the same power, or up to 30 percent power reduction at the same speed.

The first customer for TSMC's 3nm production line is expected to be Apple, which is also in line to be one of the first takers for the company's 2nm (N2) production process, details of which the TSMC disclosed in June, and with which it expects to begin manufacturing in 2025.

Korean rival Samsung announced earlier this year that it had already begun producing chips using its own 3nm fabrication process, although there was speculation that Sammy was treating the initial production batches as a trial run and is not expecting the yield to be high enough to qualify as full-scale production.

TSMC said earlier this year it intended to invest as much as $44 billion in 2022 into building out its production capacity in the expectation that strong demand for chips would continue, but there have been signs for several months that demand is now weakening as a result of inflation hitting consumer spending and other factors.

This week, Korean chipmakers reported the first fall in shipments for almost three years, according to Bloomberg. The figures from the Korean national statistics office showed that semiconductor shipments in July were down 22.7 percent when compared with the same month last year, while June’s figures showed a 5.1 percent rise.

Weeks ago, research company TrendForce said that pricing in the memory market is weakening, with falling demand in the PC and mobile sector, while shipments are also slowing because many customers still have stockpiled inventory to use up.

Gartner also predicted that the growth in global semiconductor sales will tail off this year, and is forecasting a market decline in revenue of 2.5 percent for 2023. ®