TAIPEI — Taiwan Semiconductor Manufacturing Co. (TSMC), which for the first time this year led the world’s chipmakers with the largest announced capital expenditure, will cut the 2015 budget by more than a quarter to $8 billion after demand slumped.
The world’s largest chip foundry earlier this year set its planned capex within a range of $10.5 billion and $11 billion.
A slowdown in global demand and inventory reduction that will probably continue during the fourth quarter this year have had a negative impact on business, TSMC Co-CEO Mark Liu said at a meeting to announce the company’s third-quarter 2015 results. Unit growth for smartphones, the largest business driver for TSMC, is slowing, Liu added.
TSMC decided to cut its 2015 capex to take advantage of capital efficiency gains and recent changes such as its conversion of existing capacity to finer geometries, according to Chief Financial Officer Lora Ho. About a third of the budget cut is attributable to operating efficiency gains and another similar portion is a result of the conversion of 20nm capacity to 16nm, she said. TSMC’s 2016 capex is likely to increase from 2015, she added.
Still, some analysts expressed skepticism.
“TSMC cut capex quite substantially in three months,” said Goldman Sachs analyst Donald Lu at the TSMC event. “Efficiency gains and conversion, those things don’t seem like something you’d know about in the last three months.”
TSMC is continuing to drive an effort to improve capex efficiency, Ho responded.
16nm FinFET
For the first time, TSMC recognized 16nm FinFET products as part of its quarterly revenue. Together, 16nm and 20nm products accounted for 21 percent of TSMC’s third-quarter sales of NT$212.5 billion ($6.6 billion), the company said.
For the first time, TSMC recognized 16nm FinFET products as part of its quarterly revenue. Together, 16nm and 20nm products accounted for 21 percent of TSMC’s third-quarter sales of NT$212.5 billion ($6.6 billion), the company said.
The company’s most advanced technology node will continue to ramp strongly in the fourth quarter, TSMC said.
Revenue contribution from 16nm has been better than TSMC expected earlier this year, Co-CEO CC Wei said without elaborating. Yield improvement is progressing well, setting a new internal record for ramping up a new technology node, he said. The company may launch production of 16nm FinFET C products, a compact version of the new technology, earlier than expected in the second half of 2016, he said.
TSMC reiterated its expectation that 16nm will be a “long node” similar to its cash cow 28nm process that went unchallenged in the marketplace for nearly five years.
Which Apple A9 Is Better?
TSMC tipped its hat in response to a number of blogs reporting that TSMC-made Apple A9 processors outperform those made by competitor Samsung of South Korea in the latest iPhone 6s smartphones.
TSMC uses its 16nm FinFET process to make the A9, compared with Samsung, using its 14nm FinFET process.
“The actual battery life of the iPhone 6s and iPhone 6s Plus, even taking into account variable component differences, vary within just 2-3% of each other," Apple spokesman Alex Kirshner said in an emailed comment to EE Times. “Certain manufactured lab tests which run the processors with a continuous heavy workload until the battery depletes are not representative of real-world usage, since they spend an unrealistic amount of time at the highest CPU performance state.”
TSMC Co-CEO Wei said that the company “respects” the analysis.
Other Nodes
TSMC said its work on upcoming 10nm and 7nm technology nodes is proceeding well. The company will begin technology qualification for 10 nm during the fourth quarter this year, and customer tapeouts will start early in 2016, according to Co-CEO Mark Wei.
TSMC said its work on upcoming 10nm and 7nm technology nodes is proceeding well. The company will begin technology qualification for 10 nm during the fourth quarter this year, and customer tapeouts will start early in 2016, according to Co-CEO Mark Wei.
“The migration from 10nm to 7nm provides substantial improvement in performance, power and density,” he said. “Fully functional SRAMs of our 7nm have already been demonstrated.”
Meanwhile, demand for the company’s mature 28nm products dropped during the third quarter, TSMC said. Capacity utilization for 28nm products fell from more than 90% in the second quarter to less than 80% in the third quarter. TSMC said it will protect its market share in 28nm at the same time as it maintains profit.
Competitors such as United Microelectronics Corp. started offering 28nm products earlier this year.
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