Specialist
Former Department Manager at Taiwan Semiconductor Manufacturing Co Ltd (TSMC)
Agenda
- US capacity expansion plans and geopolitical tensions affecting TSMC (TWSE: 2330)
- 2nm node R&D results interpretation with FinFET (fin field-effect transistor) architecture
- Potential oversupply of 28nm capacity across foundries
Questions
1.
US-China trade tensions have continued for several years, with the US banning TSMC from selling to China-based customers such as Huawei. However, the US government also lifted the ban on Sony from selling to Huawei. What are your thoughts on this and how do you feel about a fully localised value chain across EUV [extreme ultraviolet] lithography machines, foundries, fab work and testing in China?
2.
Could you elaborate on TSMC’s 28nm expansion plant in Nanjing and how the collaboration model may change with its China-based customers? How are dynamics changing for the company in China?
3.
How could potential reductions in promised US government subsidies affect TSMC’s plan to move equipment into the US plant by the end of 2022, and then begin production by Q1 2024? We understand that the US government is trying to support local semiconductor companies, and Intel has made changes to its strategy.
4.
Could you estimate the variable-cost gap between manufacturing in the US and Taiwan, besides the initial CAPEX outlay for which TSMC received support from the US government?
5.
How many wafers per month does one of TSMC’s Taiwan plants need to produce before economies of scale kick in?
6.
Are there any tiers to the economies of scale? You suggested 40,000 wafers per month is a good starting point for realising them, so is there a percentage cost-per-die reduction this translates to? Does this vary significantly depending on the plant and node?
7.
You said that 40,000-45,000 wafers per month may allow an 8-10% cost reduction. What machines or fixed costs are required to hit this volume mark and subsequent reduction?
8.
What is the next volume level a plant would want to achieve if there is an 8-10% cost reduction at 40,000- 45,000 wafers per month?
9.
Would you say that high employee turnover – even for technical and senior positions – remains an issue in China’s semiconductor industry? Are we noticing improvements given the need to localise the value chain? We know that TSMC’s Nanjing plant will cater to EV [electric vehicle] clients.
10.
What are your thoughts on Intel’s recently launched Alchemist chips? The company’s cutting-edge, flagship 6nm chips are outsourced to TSMC, despite Intel announcing its IDM [integrated device manufacturer] 2.0 strategy.
11.
You said that Intel’s cost structure is likely to be much higher than TSMC’s even if it expands in advanced nodes. What components are driving TSMC’s lower cost? What is TSMC doing better than Intel in the cost structure?
12.
How do you evaluate TSMC staying on FinFET [fin field-effect transistor] for 2nm and eschewing GAA [gate-all-around]? While Samsung seems committed to its nanosheet GAA architecture, it likely has a dual- track R&D process with FinFET in case GAA doesn’t work out. Are there risks to TSMC not dedicating more to GAA now?
13.
How could the EUV machine shortage impact 2nm development timelines? Is it too soon to tell? Is equipment procurement currently a minor concern given it will be some time until production starts?
14.
How can TSMC further reduce its cost per die for 2nm FinFET?
15.
Could you elaborate on TSMC’s advanced back-end compared to that of other foundries?
16.
What do you think are the key challenges TSMC still needs to overcome before commercialising 2nm given the latest R&D results?
17.
How long does it take to convert customers to a new node? I understand that foundries’ 28nm capacity expansions, including TSMC’s, are predicated on confidence that they can convert 40nm customers in the next three years. Is this a sensible time frame for conversion based on previous trends?
18.
What is the price differential between 40nm and 28nm?
19.
Why would a customer choose SMIC once TSMC has a plant with similar 28nm technology in Nanjing? Could SMIC still have a chance if it offers aggressive price discounts to the EV customers as Samsung is doing in the advanced nodes against TSMC? Is it unlikely that SMIC would win even with discounts given that safety and reliability are top concerns for EV customers?
20.
We understand that smartphone OEMs have stepped up their demand forecasts due to the US Huawei ban – industry-wide demand is predicted to be 2.5-3 times higher than existing foundry capacity. However, China’s smartphone OEMs have reduced their demand forecasts by 30% in 2021. Why is TSMC still so confident about investing USD 100bn in CAPEX given this context? Is there anything else that you think the company could do to prevent double booking?
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