Taiwan’s TSMC, the world’s largest foundry company, has achieved 100% utilization of its 3nm process for the first time in five quarters. This record-breaking milestone was reached due to consistent orders from Apple and other clients.
Industry analysts predict an even faster ramp-up for the 2nm process, expecting it to hit full capacity within four quarters after mass production begins.
Counterpoint Research reported on Wednesday that TSMC’s 3nm process demand has surged, driven by Apple’s A17 Pro and A18 Pro mobile application processors and x86 central processing units (CPUs) designed for computers. This robust demand pushed the operating rate to 100% merely five quarters after mass production commenced in Q4 2022.
The future looks bright for TSMC’s advanced processes. The introduction of Nvidia’s next-generation Rubin graphic processing units (GPUs) and Google’s seventh-generation tensor processing unit (TPU v7), coupled with growing demand for artificial intelligence (AI) application-specific integrated circuits (ASICs) and high-performance computing, is expected to maintain high utilization rates.
TSMC’s upcoming 2nm process, slated for mass production by year-end, is projected to reach full capacity even faster than its 3nm predecessor. This acceleration is attributed to the ever-increasing demand in the smartphone and AI sectors.
During its Q1 earnings call, TSMC boldly predicted that demand for 2nm technology would outpace the 3nm and 5/4nm processes in the first two years of mass production.
Beyond Apple, industry giants like Qualcomm Incorporated, MediaTek, Intel Corporation, and Advanced Micro Devices (AMD) are reportedly eyeing the 2nm process for their future chip designs.
In contrast, older nodes such as 7/6nm and 5/4nm, primarily catering to the smartphone market, have seen slower production expansion.
The 7/6nm process hit peak utilization in 2020, riding the wave of smartphone demand, while the 5/4nm process began its recovery in mid-2023, buoyed by Nvidia’s surging AI accelerator orders.
In a strategic move to mitigate geopolitical risks and meet growing U.S. demand, TSMC is pouring up to 165 billion USD into its Arizona facility. This state-of-the-art plant is set to produce cutting-edge 2nm and beyond processes, with plans to account for roughly 30% of TSMC’s total 2nm production capacity in the long run.