The foundry cost for TSMC’s 2nm is nearly $25,000

Following several months of protracted deliberation, Taiwan Semiconductor Manufacturing Company’s (TSMC) 3nm process node finally entered mass production at the end of last year. Its price, breaching the $20,000 mark, stands $4,000 higher than the foundry cost of the 4nm/5nm process. This increase in cost has deterred numerous clients, leaving Apple as the lone customer of TSMC’s inaugural N3 process, and monopolizing all production capacity.

Samsung and Intel both endeavor to catch up with TSMC in the foundry sector, but TSMC continues to command an indomitable lead, securing the lion’s share of 3nm orders on the market, and commencing negotiations for 2nm collaboration. According to DigiTimes, the foundry cost for TSMC’s 2nm is nearly $25,000, an approximately 25% increase from the current 3nm price. TSMC’s 2nm process node will be the first to adopt the Gate-All-Around FET (GAAFET) transistor architecture, reliant upon existing extreme ultraviolet (EUV) lithography technology.

Industry insiders note that since entering the 7nm process node, the cost of advanced technology has escalated relentlessly. TSMC’s foundry cost for the 6/7nm process approaches $10,000, the 4/5nm process is around $16,000, and the 3nm process reaches an exorbitant $20,000. The only entities able to obtain discounts are Apple, their largest client, and a select few manufacturers with substantial order sizes. Despite persistent rumors of yield and performance issues, TSMC’s supply and bargaining advantages have left many IC design companies with no choice but to “place orders with their eyes closed.” Presently, fewer and fewer clients possess the necessary funds and product demand to place orders for the 2/3nm process node, and these clients have all established long-term collaborations with TSMC.

According to TSMC’s timeline, the N2 process is anticipated to be ready for risk production by the end of 2024 and will transition to mass production by the end of 2025, enabling clients to receive the first batch of 2nm chips in 2026. Similar to the 3nm process node, it is expected that TSMC will again secure the majority of orders from large-scale chip design companies, ushering in a new wave of growth from 2024.

IC design practitioners assert that TSMC’s ever-increasing foundry prices, coupled with pressures such as inflation, will all be passed down to downstream clients, reflected in the prices of end devices. In recent years, prices for various new products, including Apple iPhones and NVIDIA GPUs, have continually escalated. It appears this high-pricing strategy has reached a point of no return.