The report comes from Digitimes, and has been translated by a bilingual Twitter account named RetiredEngineer. It states that TSMC’s three biggest customers are backpedaling on future orders for wafer capacity. Apple has already begun production of the iPhone 14, but has already cut its “first wave” order of 90 million phones by 10 percent. AMD reduced its order for 7/6nm by 20,000 wafers for the fourth quarter as well. However, it states order volume for 5nm wafers for PCs and servers is unchanged. That is assumedly its Zen 4, Epyc/Threadripper, and RDNA3 products.
TSMC 12-inch foundry. Photo by TSMC.
Nvidia is apparently in a much tougher spot though, and is getting pushback from TSMC. The company famously switched from Samsung’s 8nm process to TSMC’s 5nm node for its RTX 40-series. In doing so, it allegedly made a massive down payment on 5nm and below wafer capacity. This was all done mid-pandemic, so it was a smart move at the time. Now that crypto mining has crashed though, there’s a deluge of 30-series GPUs on the market. The article calls it “enormous channel inventory.” This has caused Nvidia’s partners to reduce their orders, so Nvidia is asking for some slack from TSMC. However, TSMC is reportedly unwilling to reduce its order.
All it’s offering Nvidia is to push the first shipment of GPUs back one quarter. Or, if it really needs it, it can be pushed to Q1 of 2023. However, if Nvidia takes this offer it will be responsible for finding a replacement for the now-idle fab capacity. That is likely going to be a very tough ask. Not only because of the current market conditions, but what they’re projected to be at the end of the year. It’s the whole reason why these companies are asking to reduce their orders in the first place. Also, those quarterly numbers aligns with the rumors Nvidia would be unveiled the RTX 40-series in September. Pushing it back on quarter would put it in Q4, and then one more is Q1. We certainly hope that doesn’t happen, but it seems likely.
The overarching message of the article is about how the situation is causing “pessimism” within the semiconductor industry. That’s according to a full translation on Reddit. The unprecedented nature of the three company’s request is giving everyone jitters. Adding stress to the situation is global inventories for cell phones, TVs, and notebooks are increasing rapidly. It looks like a total reversal in terms of supply and demand that was experienced over the past two years. The bottom line is that TSMC will likely revise its 2022 annual projections. Despite this unexpected hiccup, the company remains confident in its outlook for the next five years. As we’ve noted before, it’s about to begin its 3nm production, which is expected to be a very popular node. TSMC thinks so too, and plans to keep it operational for at least three years.
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