TSMC may cut 3nm wafer prices to entice AMD, Nvidia, others

[Daniel Sims]

TL;DR: TMSC may reverse its decision to charge more for its most advanced silicon wafers. As the company faces an early 2023 revenue dip, it may try to lure more chip manufacturers onto its latest node processes with more aggressive pricing.

Sources have told MyDrivers that TSMC could lower the prices of 3nm chips to entice more manufacturing partners. The cut would apply to all of the company's 3nm processes, not just the inaugural N3.

Last November, DigiTimes reported that TSMC planned to charge $20,000 per 3nm wafer – a 25 percent hike over 5nm because of the extensive EUV lithography process involved in manufacturing. Apple accepted the price increase to secure 3nm chips for its upcoming iPhone 15, but it seems other companies like AMD, Nvidia, Qualcomm, and MediaTek backed off for the time being. Apple is TSMC's main customer for N3.

The Taiwan-based company started mass-producing N3, its first 3nm process node, at the end of 2022. The more stable and efficient N3E node is expected to follow later in 2023 and may be less expensive to produce. That might enable TSMC to lower prices, but they could also cut the price of N3 if they wanted to drive larger volumes.

AMD is expected to use a 3nm process for its upcoming Zen 5 CPU architecture, which first emerged in a May 2021 leak. It's unclear when AMD might officially unveil Zen 5. Nvidia could utilize 3nm for its next line of gaming GPUs – codenamed Blackwell – which would likely appear in 2024.

Meanwhile, TSMC reported this week that its first-quarter 2023 profits could fall by 5 percent as the company starts to feel the effects of the global economic downturn. Although the chip industry's broad reliance on TSMC helped its fourth-quarter 2022 profits, decreasing consumer demand is expected to impact the Taiwanese giant throughout the later part of 2023, possibly resulting in single-digit declines.

Still, TSMC is hoping for recovery with upcoming product launches like the iPhone 15, which relies on its manufacturing, to provide a boost. TSMC might also cut spending on future expansion plans. Last year, the company reduced projected expansion spending from $44 billion to $36 billion.

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https://www.techspot.com/news/97269-tsmc-may-cut-3nm-wafer-prices-entice-amd.html

 

[Vulcanproject]

Could attract the console manufacturers. They only care about production cost which is why they no longer rush to nodes which do not give them a saving. If they see swathes of 3nm discounted they will be more keen to refresh their APUs and build properly compact versions.

 

[Ludak021]

I think they are cutting the prices in order to sell the slots but what do I know, some companies just decide to loose profits for no reason...not.

 

[Theinsanegamer]

I guess increasing the price from $2500 per wafer to $16000 per over the last decade is finally catching up to them.

 

[yRaz]

I guess increasing the price from $2500 per wafer to $16000 per over the last decade is finally catching up to them.

why do people keep forgetting they've gone from 100mm wafers to 300mm wafers? Per unit volume, chips are still cheaper than they were in the early 2000's and that's including inflation.

That said, going from $16000 to $20000 for a 300mm wafer sounds like TSMC was pulling an nVidia and trying to oversell their position. Now they have lost sales and are going to make even less money than if they had just kept prices the same.

 

[takaozo]

why do people keep forgetting they've gone from 100mm wafers to 300mm wafers? Per unit volume, chips are still cheaper than they were in the early 2000's and that's including inflation.

That said, going from $16000 to $20000 for a 300mm wafer sounds like TSMC was pulling an nVidia and trying to oversell their position. Now they have lost sales and are going to make even less money than if they had just kept prices the same.

Because the 300mm wafer was introduced 22 years ago.

 

[Julnor]

As long as governments don't bail out corps or otherwise regulate/socialize their profits, this is how healthy capitalism is supposed to work. That's the reason corps just don't charge the absolute max they can to "maximize profits". Maximize profits means long term viability. I always see people excuse the nonsensical prices we've seen Nvidia and the rest of this sector engage in these last couple of years with zero understanding of how the process actually works. These same voices will be completely silent on this topic or will just claim expertise going the other direction now. I'm honestly shocked at how dumb internet discourse always gets, it always seems like the dumbest, least inexperienced people talk the loudest and somehow create an echo chamber.

 

[SRB]

I will never understand the modern stock market and it's reporting. TSMC has made record profits for quite some time, now, a fall in profits of 5% is the end of the world. Sell, they've lost their magic, the company will soon fail, etc. Then, on to the nest "big winner". The bottom line is that the US economy and energy has caused a fall of in demand for many things, most of which are built with semiconductors. Banner headline to announce what everybody already knows, your paycheck isn't going as far and time to cut back. I'd love to have 5% of TSMC's revenue. They'll be fine, and life will go on.

 

[Hodor]

I will never understand the modern stock market and it's reporting. TSMC has made record profits for quite some time, now, a fall in profits of 5% is the end of the world. Sell, they've lost their magic, the company will soon fail, etc. Then, on to the nest "big winner".

Two things:
1. Let's say you earned $10,000 in 2019. Then $20,000 in 2020. Then $40,000 in 2021. Obviously, you're not just increasing your profit, but the growth is exponential. Your profit doubles every year. You're an obvious winner. Unfortunately, in 2022 you earn just $75,000. OMG. That's not exactly 2x more. Yes, it's $35,000 more but not 2x. So, they tag it as "loss of growth". It's still growth, and it's exponential, but the exponent has gone down. A tragedy, right? Sell, sell, sell.

2. Many of those investors are involved in "pump and dump" scheme. They first pay media to ruin a perfectly good stock, then when it drops low enough, they buy it. After that they pay media to make that stock a hit. When the stock rises, they sell it. And then they do the same with some other "victim".

For example, stocks of a famous pharmaceutical corporation (owned by big funds) will skyrocket after they announce a "magical cure" (or at least the bribed press will say it's magical). Then they sell their own stocks, and a month later the same press releases an article where the cure may have problems. Stocks start sinking, of course. Then the corporation (the fund) buys back their own stocks, at a much lower price. A month later the press announces that laboratory tests were wrong and the cure is okay and the production will start soon. The stocks go up, they sell them..... millions/billions in their pockets.

After the new cure is released, their old cure of the same type must be denigrated in press. By "old" I mean older than 20 years, which means its patent has expired. Suddenly a press release will appear showing that old cure, which was the gold standard, is actually crap, and has caused a number of problems to the patients.

But no worries, because the new cure is here...... much better than the old one. And about 10 times more expensive. But when health is in question, money is irrelevant. Right?

 

[rmcrys]

I will never understand the modern stock market and it's reporting. TSMC has made record profits for quite some time, now, a fall in profits of 5% is the end of the world.

1) a fall, whatever it is, means the company lost strength. This means less investors and stocks also going down.
So, when you earn less -> earn less + scare investors + stocks worth less -> you lose a lot of money

2) due to point 1, the competition may earn contracts, open new factories and dangerously climb fast

3) this is a dynamic game, as long as contacts appear and you can ask for more money, then prices go up. Now that the fear went up and much fewer people are buying, TSMC is seeing costumers reducing the demand, so in order to new attractive again, prices must be inferior or they won't sell.

 

[yRaz]

Because the 300mm wafer was introduced 22 years ago.

it was my understanding that TSMC didn't start using 300mm wafers until 2013

 

[takaozo]

it was my understanding that TSMC didn't start using 300mm wafers until 2013

I meant global introduction not TSMC, and maybe some TS readers are younger than this.

 

[Kashim]

Two things:
1. Let's say you earned $10,000 in 2019. Then $20,000 in 2020. Then $40,000 in 2021. Obviously, you're not just increasing your profit, but the growth is exponential. Your profit doubles every year. You're an obvious winner. Unfortunately, in 2022 you earn just $75,000. OMG. That's not exactly 2x more. Yes, it's $35,000 more but not 2x. So, they tag it as "loss of growth". It's still growth, and it's exponential, but the exponent has gone down. A tragedy, right? Sell, sell, sell.

2. Many of those investors are involved in "pump and dump" scheme. They first pay media to ruin a perfectly good stock, then when it drops low enough, they buy it. After that they pay media to make that stock a hit. When the stock rises, they sell it. And then they do the same with some other "victim".

For example, stocks of a famous pharmaceutical corporation (owned by big funds) will skyrocket after they announce a "magical cure" (or at least the bribed press will say it's magical). Then they sell their own stocks, and a month later the same press releases an article where the cure may have problems. Stocks start sinking, of course. Then the corporation (the fund) buys back their own stocks, at a much lower price. A month later the press announces that laboratory tests were wrong and the cure is okay and the production will start soon. The stocks go up, they sell them..... millions/billions in their pockets.

After the new cure is released, their old cure of the same type must be denigrated in press. By "old" I mean older than 20 years, which means its patent has expired. Suddenly a press release will appear showing that old cure, which was the gold standard, is actually crap, and has caused a number of problems to the patients.

But no worries, because the new cure is here...... much better than the old one. And about 10 times more expensive. But when health is in question, money is irrelevant. Right?

This is a typical anecdote you just recited that is often used to explain how evil the stock market, investors, and big corporations are. The big problem with your story is that basically all of it is illegal. The whole "pump and dump" scheme has been tried many times and most of the time it fails with the people involved getting fined and/or going to jail.

A much simpler way to describe the whole thing is to just say that investors are greedy. They expect never ending profits that are constantly increasing. As soon as profit increases slow down they panic and start selling, which can start a chain reaction that can really damage certain companies and their stocks.

 

[Hodor]

This is a typical anecdote you just recited that is often used to explain how evil the stock market, investors, and big corporations are. The big problem with your story is that basically all of it is illegal. The whole "pump and dump" scheme has been tried many times and most of the time it fails with the people involved getting fined and/or going to jail.

A much simpler way to describe the whole thing is to just say that investors are greedy. They expect never ending profits that are constantly increasing. As soon as profit increases slow down they panic and start selling, which can start a chain reaction that can really damage certain companies and their stocks.

Really??? LOL. Despite being illegal it's happening all the time.

Whether we're talking about stock market, forex or crypto currencies, it's the most standard, most basic mode of operation. In fact, if we go even more global, why do you think there's a global crisis every 9-11 years? Because the entire global market is one big pump and dump scheme.

 

[Tams80]

Could attract the console manufacturers. They only care about production cost which is why they no longer rush to nodes which do not give them a saving. If they see swathes of 3nm discounted they will be more keen to refresh their APUs and build properly compact versions.

TSMC are cutting the prices comparatively. And they aren't going to undercut their other nodes, so this isn't going to be cheaper than them.

Consoles makers are after cheaper. If TSMC are struggling to convince the likes of AMD (for their own products), Nvidia, Qualcomm, etc., then they aren't going to be getting the console makers.

 

[passwordistaco]

It will probably take about a year for any of these discounts to result in products to market. You can't just move a 5nm design to a 3nm node - it needs to be respun.

 

[Avro Arrow]

As long as governments don't bail out corps or otherwise regulate/socialize their profits, this is how healthy capitalism is supposed to work.

There is no such thing as "healthy capitalism" because it requires IPO corporations to be constantly increasing profits whether they need it or not. They believe in this myth of infinite growth which is impossible in a finite market. Capitalism itself is nothing more than a long road that results in a dystopian monopoly.

That's the reason corps just don't charge the absolute max they can to "maximize profits". Maximize profits means long term viability.

No, maximizing profits to them means short-term profits at the cost of long-term sustainability. If a corporation is making money hand-over-fist just doing what it's doing, it doesn't change the fact that it's going to try to rake in more and more year after year. The game is called "Monopoly....or BUST!" and usually, they go bust.

I always see people excuse the nonsensical prices we've seen Nvidia and the rest of this sector engage in these last couple of years with zero understanding of how the process actually works.

No argument there.

These same voices will be completely silent on this topic or will just claim expertise going the other direction now. I'm honestly shocked at how dumb internet discourse always gets, it always seems like the dumbest, least inexperienced people talk the loudest and somehow create an echo chamber.

Yup. I agree 100%.