Apple to take 53% of TSMC’s 5nm chip production this year according to new estimate

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Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s largest contract foundry. You see, a lot of your tech giants including Apple, Qualcomm, MediaTek and Huawei does not have the facilities to manufacture chips. So these companies take their chip designs and outsource the production of these integrated circuits to foundries like TSMC and Samsung. For example, last year’s Qualcomm Snapdragon 865 was produced by TSMC using its 7nm process node. This year’s Snapdragon 888 is made by Samsung Foundry using the latter’s 5nm process node. After TSMC, Samsung Foundry is the second largest contract foundry on the planet.

Apple to be responsible for 53% of TSMC’s 5nm chip production this year, Counterpoint says

Friday, Counterpoint Research has released data based on its 2021 foundry industry estimates. Foundry industry revenue increased 23% last year to $ 82 billion. Counterpoint has shaken its Magic 8 ball and is now claiming 12% growth this year for $ 92 billion in revenue. TSMC is expected to grow 13% to 16% this year while remaining roughly in line with the overall industry growth rate. Including chips ordered for other Samsung projects and those shipped to companies such as Qualcomm and NVIDIA, Samsung Foundry is expected to record a 20% revenue gain in 2021. This year, the industry’s growth will be driven by gains in wafer shipments and an increase of approximately 10% in comparable wafer prices.

TSMC and Samsung Foundry both provide cutting edge chips made using the 5nm and 7nm process nodes. Based on the density of transistors (the number of transistors in a square mm), the lower the number of processes, the more powerful and energy efficient a chip. The industry just started shipping 5nm chips this year with Apple’s A14 Bionic, the first 5nm integrated circuit found on a smartphone.

Counterpoint Research expects Apple to be TSMC’s first 5nm customer this year, accounting for 53% of production thanks to the A14 and A15 Bionic chips and the M1. 5nm production will account for 5% of 12-inch wafers this year, down from less than 1% last year. Counterpoint sees Qualcomm account for 24% of TSMC’s 5nm chipmaking, as Apple is expected to use Qualcomm’s 5G X60 5nm Snapdragon modem in the iPhone 13. TSMC and Samsung are expected to have 90% of their 5nm gear set aside for 2021 with the first turnover. $ 10 billion from 5nm business this year.

Unlike 5nm wafers, 80% of which are used for smartphones, 7nm chips are more widely used with only 35% of output used for smartphones. 7nm will account for 11% of 12-inch wafer usage this year, Counterpoint predicts. TSMC and Samsung both make a variety of 7nm chips, including those made with EUV. Extreme ultraviolet lithography uses beams of UV light to etch extremely fine patterns on wafers to help engineers create circuits. The use of UVU has helped foundries reduce their current 5nm process nodes with volume production of 3nm starting next year.

This year, TSMC’s first customer for 7nm will be AMD; the latter will represent 27% of this production according to Counterpoint. NVIDIA comes next with 21%, followed by MediaTek at 10% and Intel with 7%. Yes, the latter has its own factory, but its capabilities are behind TSMC and Samsung Foundry when it comes to the process node. Research firm says Intel’s decision to outsource is necessary to maintain the chipmaker’s long-term survival. Apple will take 6% of TSMC’s 7nm output this year because it still needs 7nm chipsets for some of its older phones.

Counterpoint notes that a higher chip inventory, now up to 79 days compared to 70 days since 2016, is due to the pandemic, global trade battles and other issues. As a result, the chip industry will get used to higher inventory levels throughout the year. Counterpoint sees the industry’s annual revenues reach $ 100 billion by 2022-2023.

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