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The Taiwan Semiconductor Mfg. Co (NYSE: TSM) confirmed Friday that a manufacturing defect has caused the Taiwanese smelter to scrap tens of thousands of platelets in its Fab 14 12nm / 16nm plant. TSMC investigated the issue and found that a "photoresist" layer was using a poorly treated compound containing foreign polymers.
The damage? More than $ 550 million according to the largest independent foundry company in the world. Several companies have been cited, including the NVIDIA graphics chip manufacturer (NASDAQ: NVDA).
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The photoresist is considered a raw material used by TSMC and the company stated on file that a new source had already been established for the new production runs.
TSMC lost half a billion dollars because of poor raw material inputs
The 12 / 16nm is TSMC's flagship process and, although it is beginning to be supplanted by the next generation 7nm process, it still contributes the lion's share of TSMC's revenue. All current NVIDIA Geforce video cards, for example, are manufactured on these production lines and it is possible that a large volume of NVIDIA GPU chips were discarded as a result of the manufacturing incident. GPU chips indeed take several months to arrive on store shelves.
According to Semiconductor Engineering:
A 28 nm device has 40 to 50 mask layers. For comparison, a 14 nm / 10 nm device has 60 layers, of which 7 nm should go from 80 to 85. 5 nm could have 100 layers. Thus, with today's lithographic techniques, cycle times increase from about 40 days at 28 nm, to 60 days at 14 nm / 10 nm and from 80 to 85 days at 7 nm.
It is said that a layer takes between 1 and 1.5 days with the 16 nm process and that extra weeks are needed for shipping, packing and testing, it can easily be done. run about 4 months before the chips in production fall into the hands of consumers. TSMC originally announced the issue at the end of January, so its potential supplies could tighten by May-June.
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If we say that 10,000 NVIDIA chips have been scrapped and we use the Geforce 2060 at 445 mm ^ 2, we can estimate that about 1.2 million chips will not be manufactured as expected. In theory, consumer prices could be increased due to a lack of supply, but the most interesting would be to examine its impact on NVIDIA. 1.2 million Geforce 2060 would cost $ 420 million!
However, NVIDIA is a leading customer of TSMC and their priority is now given in terms of plant allocation, so they will probably not see the potential effects described above. TSMC will do everything in its power to obtain the chips ordered by NVIDIA.
For their part, TSMC claims to have underestimated "some production" starting in the second quarter, with platelet starts of up to $ 230 million. TSMC will now move to $ 7.1 billion, up from $ 7.4 billion in the first quarter. It's never a good idea to steal Peter to pay Paul (steal the T2 earnings to get them into T1), but at least TSMC at least slows the blow in half.
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