TSMC 3nm chip production is well underway, with the latest process expected to be used for both the A17 chip in the iPhone 15 Pro, and the M3 destined for future Macs. However, the company told analysts that it isn’t yet able to keep up with customer demand.
Apple’s chipmaker also said that yield rates (the percentage of chips that pass quality control tests) are not yet good enough to charge the iPhone maker for every wafer produced …
Background
Taiwan Semiconductor Manufacturing Co. (TSMC) has for many years led the world in ever-smaller processes – that is, fitting more and more transistors into a given space. The denser the transistor layout, the more powerful a chip can be for any given size.
The latest process to be offered by TSMC is three nanometer (3nm), which the company dubs N3. Samsung generally sits one to two years behind TSMC in process size, while Intel is many years away from 3nm.
TSMC’s 3nm process is expected to be used for Apple’s A17 chip, destined for the two iPhone 15 Pro models, while the non-pro models will use the older A16 chip. We’re also expecting to see the same 3nm process used for the M3 chip in future Macs.
TSMC 3nm chip production can’t keep up
The chipmaker’s CEO, CC Wei, told analysts that the company can’t yet keep up with “customer demand” – almost certainly a reference to Apple. EE Times reports:
Taiwan Semiconductor Manufacturing Co. (TSMC) is straining to meet demand from top customer Apple for 3-nm chips. The company’s tool and yield struggles have impeded the ramp to volume production with world-leading technology, according to analysts surveyed by EE Times […]
“Our 3-nm technology is the first in the semiconductor industry to high-volume production with good yield,” TSMC CEO C.C. Wei said in a conference call with analysts. “As our customers’ demand for N3 exceeds our ability to supply, we expect N3 to be fully utilized in 2023, supported by both HPC and smartphone applications.”
Can’t yet charge Apple for every wafer
Chips are produced in wafers, comprising hundreds of individual chips. Apple normally pays TSMC an agreed price per wafer, but because only just over half of the chips on each wafer are usable at this stage of production, the iPhone maker is currently paying for each usable chip.
Apple will pay TSMC for known good die rather than standard wafer prices, at least for the first three to four quarters of the N3 ramp as yields climb to around 70%, Brett Simpson, senior analyst at Arete Research, said in a report provided to EE Times.
“We think TSMC will move to normal wafer-based pricing on N3 with Apple during the first half of 2024, at around $16-17K average selling prices,” Simpson said. “At present, we believe N3 yields at TSMC for A17 and M3 processors are at around 55%, and TSMC looks on schedule to boost yields by around 5+ points each quarter.”
Although a 55% yield sounds very low, the report says that this is typical at a time when TSMC is still perfecting mass production of a new process.
2nm expected by 2025
The next major step will be 2nm chips, and these are expected to begin production in 2025. The iPhone 17 is likely to be one of the first devices to use this upcoming process.
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