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TSMC leading-edge fab investments set stage for sale surge in 2H19 Taiwan Semiconductor Manufacturing Company's heavy investments in advanced wafer-fab technology are set to pay off significantly for the world's largest silicon foundry as it continues the production ramp of 7nm ICs in the second half of this year, according to IC Insights.
TSMC is expected to see its revenues in the second half of 2019 jump 32% from the first half - more than three times the 10% growth rate expected for the entire IC industry during the same period, IC Insights said. "There is little doubt that 7nm application processors for new smartphones from Apple and Huawei are driving the forecast for a strong second-half rebound in TSMC's sales," the research firm indicated.
Illustrating how dominant TSMC is in the leading-edge pure-play foundry market, the company is expected to have over 7x the dollar volume sales at sub-40nm processes as compared to the combined 2019 total of Globalfoundries, UMC, and SMIC (US$22.9 billion versus US$3.2 billion), IC Insights said.
SMIC entered initial production of 28nm technology in the fourth quarter of 2015, more than three years after TSMC began fabricating wafers with its 28nm process. SMIC expects to log recognizable revenue from its new 14nm FinFET technology sometime in the fourth quarter of 2019, once again about three years behind TSMC's introduction of similar processes, IC Insights noted.
In 2019, TSMC is expected to have 66% of its sales come from sub-40nm technology, IC Insights said. Moreover, IC Insights forecast that TSMC will have US$8.9 billion in 7nm revenue this year, representing about 26% of its total sales in 2019 and 33% of its fourth-quarter revenues.
The pace at which TSMC's customers adopt leading-edge process technologies has quickened, IC Insights said. It took eight quarters for the foundry's 40-45nm technology to secure greater than 20% of its total sales, five quarters for its 28nm process to exceed that threshold, and only three quarters for its 7nm process to account for more than 20% of its quarterly revenue.
TSMC's 20nm, 14nm and 10nm technologies all surpassed 20% of its total sales within three quarters. TSMC also believes that its ramp of 5nm technology, as a percent of its sales, will be even faster than its 7nm process, IC Insights noted. Strong demand for the advanced nodes has resulted in tight supply and longer lead times. As a result, TSMC is already planning to set aside more funds to expand capacity for its advanced processes.
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