TSMC's big spending comes at a time when it and many other chipmakers are running at full manufacturing capacity and there are shortages in supply chains, particularly for automobile makers (see Volkswagen faces massive chip shortages) who are having to slow down production.
But TSMC provided little comfort for those customers who often rely on more mature manufacturing processes for chips made on 200mm-diameter wafers, which is not where TSMC is spending. CC Wei, TSMC's CEO, said: "We are working with customers closely and moving some of their mature node to more advanced node where we have better capacity to support them. In addition to that, we also try to manage this shortage condition, try to mitigate the impact from this shortage."
TSMC's focus on support the smartphone and high-performance computing (HPC) markets and their need for advanced processes is clear. In 4Q20 shipments of 5nm wafers accounted for 20 percent of revenue and 7nm and 16nm accounted for 29 and 13 percent respectively. TSMC has phased out 10nm production. But the advanced manufacturing processes accounted for 62 percent of revenue. In terms of applications in 4Q20 smartphones and HPC were responsible for 51 percent and 31 percent of revenue, respectively. Automotive was down at 3 percent.
Wei also gave analysts TSMC's traditional outlook for the semiconductor industry. He said TSMC expects the semiconductor sector excluding memory to grow by 8 percent in 2021. The foundry sector would grow by 10 percent and TSMC would outperform the foundry sector with growth in the mid-teens of percent, he said.
Wei said that risk production of the 3nm FinFET manufacturing process was due to start in 2021 with volume production expected in 2H22. He also said that TSMC's chiplet approach to 3D assembly would hit volume production in 2022.
"We observe chiplets are becoming an industry trend. We are working with several customers on 3DFabric to enable chiplet architecture," said Wei. "SoIC’s full volume production is targeted in 2022. SoIC is expected to be first adopted by HPC applications, where bandwidth performance, power efficiency and form factor are aggressively pursued."
One analyst asked whether the large jump in capex budget was partly due to the need to meet manufacturing requirements for Intel (see Report: TSMC to make Intel's 'next' discrete graphics chip) or whether TSMC would consider licensing out its manufacturing process technologies. "We don't comment on the specific topics or specific customers. But let me tell you that we are working with our customers continuously to expand the TSMC's business and to support our customers' demand," answered Wei.
Wendell Huang, CFO at TSMC, confirmed that the capex for 2021 includes spending for the TSMC wafer fab that begins construction this year in Arizona (see TSMC picks Arizona for 5nm wafer fab).