TSMC slashes 20nm and 28nm pricing by up to 10%

Taiwan Semiconductor Manufacturing Company (TSMC) has dropped its prices on 28nm and 20nm process technologies by 5-10% in hopes to secure additional orders from major companies which includes Qualcomm and MediaTek, according to DigiTimes. However, the reaction of 28nm prices will most likely affect AMD and Nvidia positively, who are the major producers of the largest and the most complex chips ever designed at TSMC. In particular, AMD’s “Fiji” and Nvidia’s GM200 graphics processing units feature die sizes of around 600mm² and are extremely expensive to manufacture. At this point, any particular decrease in price is a good news for GPU developers.

It is also observed that Taiwan Semiconductor Manufacturing Co. is not the only company to face rejection of chip orders, the report claims. GlobalFoundries and United Microelectronics Corp. also suffered from lowered demand for smartphones. The reduction in price are also aimed at boosting TSMC’s capacity utilization rates of 28nm and 20nm lines to more than 80%, the sources noted.

In response, TSMC declined to comment. Decelerating smartphone demand has discouraged chip providers from placing orders with their foundry partners since the second quarter, the sources said. Foundries like United Microelectronics (UMC) and Globalfoundries have seen their 28nm customers cut orders particularly for baseband chips, the sources indicated.

Also facing a cutback of orders from its key mobile chip clients, TSMC has lowered its wafer quotes for 28nm and 20nm process technologies as much as 10%, the sources suggested. TSMC’s 28nm and 20nm process utilization rates already fell to as low as 70% and 60%, respectively, in the second quarter, the sources observed. By offering discounts, the foundry expects to regain orders and improve the process utilization rates to more than 80%, the sources said.

It is newsworthy that TSMC’s 20nm fabrication process (CLN20SOC) was exclusively designed for mobile system-on-chips. In which the technology is incompatible with any other product or system. In fact, TSMC hoped that the 20nm process will help it to procure gain massive orders from Apple. While Apple did become a major customer of TSMC, it is unlikely that the CLN20SOC technology is as popular as the foundry originally believed. So far, TSMC has received around $3.25 billion in payments for wafers processed using 20nm fabrication process. The largest customer for 20nm chips is Apple, which will significantly reduce its orders for 20nm products about a quarter before it launches its next-gen iPhone and iPad based on all-new A9 system-on-chips produced using 14nm and 16nm FinFET technologies at Samsung Electronics, GlobalFoundries and, eventually, at TSMC.

Although, TSMC did not comment on the news-story.