The global chip supply chain continues to dominate the attention of electronics executives at the start of a new year. Multiple new production facilities planned in the US and abroad will, however, take years to come on board, making planning over the next two years complex and raising the possibility of rising prices for chips and end computers.
On the plus side, TSMC has begun mass production of coveted 3nm chips in Taiwan as of Thursday with an additional announcement it is prepping two 2nm fabs in Taiwan. The company estimated 3nm chips will create end products worth $1.5 trillion within five years.
TSMC is also building 3nm capacity in Arizona with production not expected to start until 2026. Any military escalation in the Taiwan Strait over rising tensions between China and the US will inevitably make the Arizona production capability more vital.
In June, Samsung began production of 3nm process-based chips with its Gate-All-Around transistor architecture at its Hwaseong, Korea, foundry. Nvidia, Qualcomm, IBM and Baidu are reportedly are among its customers. Intel is also focused on advanced chips competitive with the 3nm process and has announced two giant chip fabs for central Ohio.
Such 3nm chips are considered among the most advanced available and are used in a wide variety of applications including acceleration for compute in artificial intelligence uses. TSMC claimed its 3nm process offers 1.6 times the logic density gain and up to 35% in power reduction compared to 5nm chips.
TSMC is the primary chip producer for Apple products but is also used by many chip designers such as Nvidia and AMD. Apple has also been hampered by Covid-19 lockdowns in China where multiple iPhone assembly plants for Foxconn and others are located.
Reports from analysts in the last week of December indicated production delays have eased somewhat, now that China has lifted most Covid-controls. J.P. Morgan’s Samik Chatterjee said on Wednesday that supply is improving for the iPhone 14 Pro. One Apple customer told Fierce Electronics he ordered online an Apple iPhone 14 Pro in Deep Purple on Dec. 28 and was expected to receive a delivery to his home no sooner than Jan. 6.
Chip executives in the US will not talk publicly about their concerns over US-China relations and have been leery about trade sanctions on chips and chip production machines sold to China. Some chip executives privately say they view Biden administration sanctions affecting Chinese chip companies as an indirect means of warning China not to take action on shutting off chip production in Taiwan.
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Meanwhile, the chip industry is expected to continue to grow long term and absorb the vagaries of soured trade relations or chip shortages due to Covid lockdowns and sudden slips in supply-demand equilibrium.
A recent KPMG survey of 151 global chip executives found chips for automotive uses will be the most important revenue driver in 2023, ahead of wireless communications and cloud. The need for automotive chips is only going to expand with electric vehicles, as well as a heightened focus on autonomy, according to KPMG partner Lincoln Clark. Both EV and AV technologies will be on display in record numbers at CES 2023 in Las Vegas Jan. 5-8.
Modern cars use up to 1,000 chips each, a number expected to double with advanced self-driving features.
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