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TSMC Monopolized AI Chip Foundry And Won Nearly 100% OF Chip Orders

TSMC Monopolized AI Chip Foundry And Won Nearly 100% OF Chip Orders

March 19 , 2024 0

Even if TSMC further expands the plant to add capacity, it may still be unable to meet the demand of the market, that is, the 3-nanometer chip process will be in short supply. No matter who wins in this AI chip war, TSMC's AI chip production market share is likely to be close to 100%, which is equivalent to a monopoly market.

At present, high-end chips have become one of the important growth points of the current semiconductor industry. As the world's largest contract chip manufacturing giant, TSMC's leading position in this market is further strengthening, and its market share with its biggest rival Samsung is further expanding. Recently, some media reported that as generative AI continues to be hot, Apple, Nvidia, AMD and other large factories are competing to master the 3-nanometer process technology of TSMC orders. This makes TSMC AI chip production market share may be close to 100%.

The latest research report of TrendForce Jibang Consulting shows that in the fourth quarter of 2023, the revenue of the world's top ten wafer foundries was 30.49 billion US dollars, an increase of 7.9%. Among them, Taiwan Semiconductor Manufacturing Company (TSMC) with nearly $20 billion in revenue, and 61.2% of the market share of the first place.

In fact, not only is the total revenue and market share of the leading, TSMC is far ahead of the industry in high-end chip technology.

Taking the current large-scale production of the most advanced 3-nanometer chip process as an example, in 2023 TSMC 3-nanometer chip per piece asking $20,000, about 2 times higher than the 7-nanometer price, so the demand is relatively small, only Apple placed large-scale orders on TSMC.

In 2024, driven by AI technology and applications, the demand for smart phones, servers and other fields has soared, in addition to Apple, Qualcomm, Mediatek, Intel, AMD will begin to launch the first 3 nanometer chip this year. NVIDIA, which accounts for more than 90% of the global AI chip market, has also handed over contract manufacturing orders to TSMC.

Therefore, even if TSMC further expands the plant to add capacity, it may still be unable to meet the demand of the market, that is, the 3-nanometer chip process will be in short supply.

There is news that, driven by the demand for AI and high-end processors for mobile phones, even Nvidia, a big customer of TSMC, can only choose the 4-nanometer process. Charles Shum, an industry research analyst at Bloomberg, said Nvidia's AI semiconductor boom could "hit a wall" this year due to a lack of capacity at TSMC.

Samsung Securities researcher Moon Junho even said that no matter who wins the AI chip war, TSMC's AI chip production market share is likely to be close to 100%, equivalent to monopolizing the market.

Industry analysis, in 2024, TSMC will fully expand the 3-nanometer capacity, and even deploy part of the 5-nanometer capacity to 3 nm, and the 3-nanometer capacity utilization rate is expected to exceed 80% by the end of the year.

Previously, TSMC President Wei Zhe Jia said at the French conference that the 3-nanometer process began to enter the mass production stage in the second half of 2023, benefiting from the demand contribution of mobile phones and HPC, the revenue contribution of the 3-nanometer family will grow more than three times this year, and the overall revenue proportion has climbed from 6% last year to 14-16%.

According to financial analyst Dan Nystedt (Dan Nystedt) released data, TSMC's largest customer in 2023 is still Apple, accounting for 25% of the overall revenue, Nvidia jumped to the second place with 11%, plus Mediatek, Qualcomm, Broadcom, Marvell, SONY and Supermicro 10 major customers accounted for a total of 91%.

Relatively speaking, Samsung, which claimed the mass production of 3-nanometer chip technology earlier, seems to have an increasing gap with TSMC. According to research institute TrendForce analysis, the gap between TSMC and South Korean semiconductor giant Samsung Electronics' wafer foundry market share has widened from 45.5 percentage points in the third quarter of 2023 to 49.9 percentage points in the fourth quarter.

Although Samsung took the lead in adopting the surround gate (GAA) structure in the 3-nanometer process to narrow the gap with TSMC in the 3-nanometer process, due to the low yield, only a small number of orders such as Japanese AI giant Preferred Networks Inc. (PFN).