TSMC Tells Its Customers to Get Off Older Nodes, Move to 28nm

Image Credit: Peellden, Wikimedia Commons, CC BY-SA 3.0

(Photo: Peellden, Wikimedia Commons, CC BY-SA 3.0) Taiwanese chip-making powerhouse TSMC is telling its customers to get with the times. The company recently stated it’s attempting to get customers using older, antiquated nodes to transition their products to newer nodes, such as its 28nm process. TSMC says it will even help them move, like a good friend with a pickup. This applies mostly to companies using the comparatively ancient 40nm and 65nm nodes.

News of TSMC’s plans come from Kevin Zhang, senior VP of business development at TSMC. According to Anandtech, TSMC has no plans to build any more fab capacity for some of its older, mature nodes. All the capacity that exists today for 40nm and beyond is all that will ever exist. “We are not currently [expanding capacity for] the 40 nm node” he said. “You build a fab, fab will not come online [until] two year or three years from now. So, you really need to think about where the future product is going, not where the product is today.” Anandtech says TSMC currently gets about 25 percent of its revenue from mature processes like 40nm and larger. However, those nodes are long since paid for, and the wafers are cheap due to their age. This reduces profit-per-wafer for TSMC, which is a likely motivator for it to nudge its customers into a more modern node.

From TSMC’s perspective though, while customer pays more for a more advanced node, that move comes with obvious benefits. According to Zhang, some customers might question such a move when the 40nm chip works just fine. “I think the customer going to get a benefit, economic benefit, scaling benefit, you have a better power consumption,” he said. Summarizing it, he stated, “you go to a next node, you get a better performance and better power and overall you get a system level benefit.” The customers will also get a lot more dies per wafer as well.

TSMC previously announced it will be increasing its capacity for mature and speciality nodes 50 percent in the coming years. This effort will see the company focusing on 28nm nodes in particular. It’s announced plans to build a fab in Kumamoto, Japan that will focus on N12, N16, N22, and N28 nodes. It’s also manufacturing three more fabs to assist in this process. Two of those facilities will be in Taiwan, with the third in China.

The majority of chips made on older nodes go into smart appliances, phones, IoT, and especially cars. It’s estimated that in a few years cars will feature over 1,500 individual chips. Currently most cars only use several hundred chips. This was notably apparent as the pandemic-based chip shortage caused turmoil in the auto industry.

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