TSMC says 3-nm chip production to start soon

Taiwan Semiconductor Manufacturing Co. said its ultra-advanced 3-nanometer chip production technology will enter production “soon” but inflation and ongoing difficulties in the supply chain are pushing up the cost of building new plants.

CEO C.C. Wei described the situation facing TSMC at an annual technology forum in Hsinchu on Tuesday, acknowledging that even the world’s largest contract chipmaker has struggled with delivery delays and other constraints amid its largest-ever global expansion push.

“When carmakers told me previously that they are short of semiconductors, I thought, ‘How come these guys couldn’t understand the importance of chips?’ But later TSMC’s own equipment suppliers suffered delivery problems and told me it is also due to component and chip shortage,” Wei said.

The semiconductor supply chain is extremely complex, requiring hundreds of pieces of equipment and thousands of individual components, materials and chemicals to make chip production possible. Nikkei Asia first reported in April that all the world’s leading chipmaking equipment makers are experiencing tool delivery delays of up to 18 months.

Even shortages of relatively small components can lead to trouble in supply lines. Cutting-edge extreme-ultraviolet (EUV) lithography machines, for example, each cost more than $100 million, but a shortage of a chip costing as little as $10 can prevent their shipment, Wei said, while delivery of a $50,000 car could be halted by a lack of 50 cent radio chips.

“I think the whole world didn’t realize how important supply chain management is in the past, and the whole world didn’t do good work on supply chain management, including TSMC,” Wei said.

Supply chain management, he said, will become more critical as governments in the U.S., Europe and Asia all push to localize chip supply chains.

“Looking ahead, only highlighting efficiency may not always work. When governments around the world want to localize chip production, the cost will definitely increase. And there are also an inflation now,” Wei said.

Y.L. Wang, a TSMC vice president, said at the event that the company built an average of two factories a year from 2017 to 2019, but the pace has now increased to at least five a year. All told, the company plans to build 23 plants between 2020 and 2023.

Wei also talked about the technological future of chipmaking, saying that shrinking the size of transistors to fit more onto a chip is not the only priority. Advanced packaging and stacking, he said, will come to play a bigger role in further improving performance.

TSMC expects to have its 3D chip stacking technology, known as SOIC (system on integrated chips), enter mass production this year, and aims to boost its initial capacity 20 times by 2026.

South Korean rival Samsung Electronics said its 3-nm chip tech went into mass production in June.

The smaller the nanometer size, the more challenging it is to squeeze more transistors onto a chip. The time frame and schedule of production for such chips is seen as a measure of the technological prowess of chipmakers. Only TSMC, Samsung and Intel have a road map for continuing to develop such nanotechnologies. TSMC maintained its previous announcement that 2-nm chip production will be ready by 2025.

Apple and Intel will be the first wave of TSMC to customers use 3-nm chips, Nikkei Asia first reported. Nikkei.Asia