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TSMC blunder could let Intel win the chip war

by on18 January 2024

Generational mistake

TSMC could be about to make a mistake, costing it victory over a resurgent Intel.

While it is currently the market leader, TSMC wouldn't have beaten Intel and Samsung in the race to make more advanced chips without the help of ASML, the Dutch company that makes machines for carving circuit patterns onto silicon wafers. TSMC's early use of ASML's extreme ultraviolet (EUV) machines let it make the world's smallest chips.

TSMC started mass-producing its smallest 3 nanometer chips in late 2022, and it plans to start mass-producing its 2nm chips in 2025. But to make chips with processors smaller than 2nm,

TSMC must use ASML's new high-NA (numerical aperture) EUV machines. That's why it was shocking when analysts at China Renaissance and SemiAnalysis recently said TSMC wouldn't start using those high-NA EUV machines until after 2030.

Intel, which wants to catch up to TSMC and Samsung in the race by 2025, has already been putting in its first high-NA machines at its factories. So TSMC's decision seems like a risky move that could lose it its edge. But this could be a golden chance for Intel to gain some ground on TSMC.

TSMC isn't in a hurry to upgrade its machines for three reasons. First, it has already spent billions of dollars on its existing EUV machines, which were first used to mass-produce its chips in 2019. A single EUV machine costs about $200 million, is sent in bits by several planes, and needs extra training.

TSMC probably thinks there's still a lot of life left in these machines, and it could push the technology to the limit to make high-end chips for a lower cost than high-NA machines until the end of the decade. That's what it did before with ASML's older deep ultraviolet (DUV) machines (up to the 7nm node) before switching to EUV machines.

TSMC's early use of ASML's EUV machines was partly paid for by Apple, which was moving its production away from Samsung at the time and needed the Taiwanese chipmaker to mass-produce its top-notch chips. TSMC had been wary of using the pricey technology before Apple stepped in.

TSMC seems wary of using ASML's latest machines. But this time, there's no guarantee Apple will pay for those buys -- and the recent rumours suggest the tech giant won't cough up for the chipmaker's high-NA upgrades.

The outfit might be trying to avoid a bidding war that might break out between Intel and Samsung for ASML's first batch of high-NA machines, which each cost over $300 million. Spending too much money on new high-NA machines over the next few years could mess up its current 3nm and 2nm chips plan.

Intel is already installing ASML's high-NA machines, but it won't use the machines to mass produce its chips until a few years later. Intel expects to keep using ASML's EUV machines until its 18A (1.8nm) node, which should be as good as TSMC's 3nm node when it comes out in the second half of 2024.

But after the 18A node, Intel plans to use its high-NA machines to make smaller chips. That means it will start making its version of TSMC's 2nm chips with high-NA EUV machines while TSMC keeps using its low-NA machines.

In February, Intel will show its full plan after the 18A node and is likely to ramp up its spending to get ahead of TSMC and Samsung with better and more efficient chips -- and its earlier investments in high-NA machines could give it an edge over its two Asian rivals in the long run.


Last modified on 18 January 2024
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