Top TSMC customers are reducing wafer order volume

Apple, AMD and NVIDIA are trying to reduce their orders in the face of new market reality

After several years of constant expansion, the Taiwan Semiconductor Manufacturing Company (TSMC), currently the world’s largest smelter, may be on the cusp of a period of reduction in the manufacture of wafers. DigiTimes reports show that customers like apple, OMG and NVIDIA are trying to review old orders in the face of a scenario of sales reductions in the technology market.

While TSMC seems to be smoothly meeting the demands of AMD and Appleshe is adopting a tougher stance with NVIDIA. In this case, the foundry appears to be determined to maintain the same terms as agreed in the past, although it may give way a little if this proves necessary.

According to DigiTimes, order reductions are related to 7 and 6 nanometer chip wafers, and there are no indications of changes in demand for 5nm chips aimed at the PC and server segments. One of the foundry’s biggest customers, Apple reportedly reduced iPhone 14-related orders by 10%which had an initial wave scheduled for 90 million devices.

Cryptocurrency drop affects NVIDIA situation

NVIDIA’s case becomes emblematic because of its context: during the height of the COVID-19 pandemic, the company made several payments to ensure priority over the 5nm chips produced by TSMC. The bet was based both on the possible interest of consumers for the future RTX 40 line and on the sustainability of the cryptocurrency market — which is currently undergoing a major process of decline.

According to Bloomberg, the low price of digital currencies like Ethereum and Bitcoin is flooding the used market with GPUs applied in mining structures. The forecast is that, if the situation continues like this, 35% of the graphics card market could disappear — if the orders placed by NVIDIA remain the same as in the past, this can leave the company with an excess of inventory in the face of falling orders from its partners.

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Instead of reducing production, TSMC is only offering the company the possibility to postpone the delivery of components to the first quarter of 2023 ordered. However, if NVIDIA accepts this condition, it would also have to find a replacement for the allocation of production resources that would end up standing still.

The review of requests is the result of a global scenario of increase in inventories of smartphones, TVs and notebooks, in a reverse trend to what was observed in the first months of the pandemic. This should have a direct effect on the smelter’s financial forecasts for 2022, but she is confident that she will recover any loss once it starts production of its 3 nanometer nodules, which are expected to start shipping in early 2023.


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Source: ExtremeTech

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