Introduction
In a rapidly shifting semiconductor landscape, TSMC, the world’s largest contract chipmaker, is facing fierce competition from rival Samsung. Reports suggest that major customers like Apple, NVIDIA, and Qualcomm are reconsidering their commitment to TSMC upcoming 2nm process, raising questions about the future of TSMC’s leading position in advanced semiconductor manufacturing.
This development comes amidst growing concerns over high costs and limited production capacity for the 2nm node, with several companies exploring alternatives in hopes of securing better deals and timely access to cutting-edge chips.
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Key Points to Remember:
- TSMC’s 2nm Process Faces Delays: Apple and other major customers are reportedly delaying their adoption of TSMC’s 2nm technology until at least 2026 due to high costs and limited early capacity.
- Samsung Gaining Ground: Samsung is ramping up its 2nm process and has begun trial production in 2025, positioning itself as a serious competitor to TSMC.
- NVIDIA and Qualcomm Exploring Alternatives: NVIDIA and Qualcomm are reportedly considering Samsung for their next-generation chips, diversifying their supply chains to reduce reliance on TSMC.
- Cost and Capacity Issues: TSMC faces challenges in scaling up 2nm production due to high costs and limited capacity in the short term.
- Apple’s Strategy with TSMC: Despite the challenges, Apple continues to rely on TSMC’s current N3P process for its upcoming A19 chip, which will power the iPhone 17 in 2025.
The 2nm Race: A Challenge for TSMC
TSMC is a leader in semiconductor manufacturing. The company has pushed the industry forward with smaller process nodes. The 2nm process, expected to go into mass production by 2025, is a major milestone. TSMC has made impressive progress, with a 60% yield rate for its 2nm process. This sets the stage for its commercial rollout, with trial production scheduled for early 2025. However, high costs and limited capacity have made TSMC’s position less secure. Some of its top clients are now exploring alternatives.
Apple Delays Adoption of TSMC’s 2nm Process
Apple, TSMC’s largest customer, is delaying its adoption of the 2nm process until at least 2026. This move is part of Apple’s strategy to focus on stable and cost-effective technologies.
Apple will use TSMC’s N3P process for its upcoming A19 chip, powering the iPhone 17 in 2025. This decision could slow the widespread adoption of TSMC’s 2nm process, as Apple typically drives significant demand for new chip technologies.
Why NVIDIA and Qualcomm Are Looking Elsewhere
NVIDIA and Qualcomm, two other major TSMC clients, are also reconsidering their options. Both companies are evaluating Samsung’s 2nm process for their next-generation chips.
Traditionally, TSMC has been their preferred partner. However, with high production costs and limited early capacity, both companies are looking to diversify their supply chains.
Samsung, which has invested heavily in next-gen chip manufacturing, is gaining ground.
Samsung’s 2nm Strategy
Samsung is aggressively pursuing market share in the foundry space. The company plans to begin trial production of its own 2nm process in the first quarter of 2025.
While Samsung has lagged behind TSMC in recent years, it is making significant strides. Samsung’s 2nm process is expected to be competitive, with cost-effective solutions attracting companies like NVIDIA and Qualcomm.
By partnering with smaller startups and domestic firms, Samsung aims to capture more market share.
Scaling 2nm Production at TSMC
TSMC is working to scale its 2nm production capacity. The company expects its output to grow from 10,000 wafers per month to 80,000 wafers per month by 2026.
However, this scaling process comes with challenges. The advanced manufacturing process for 2nm chips is expensive. TSMC will need to achieve economies of scale to maintain profitability while meeting rising demand.
Could Samsung Surpass TSMC?
If Samsung can offer competitive 2nm chips at a lower cost, it could challenge TSMC’s dominance.
Securing contracts with major clients like NVIDIA and Qualcomm would boost Samsung’s credibility in the semiconductor foundry business.
Given TSMC’s struggles with ramping up its 2nm production, Samsung’s push could be the opportunity it needs to close the gap and win contracts away from TSMC.
Qualcomm Sticks with TSMC for Snapdragon 8 Elite 2
Qualcomm has decided to continue working with TSMC for its Snapdragon 8 Elite 2 chip. Despite Samsung’s efforts to secure this contract, Qualcomm chose TSMC’s N3P process for its next-generation chip.
The Snapdragon 8 Elite 2 will be released in the second half of 2025, making it one of the most powerful chips on the market. This decision shows that, for now, TSMC remains the preferred foundry partner for many tech giants.
Conclusion
As the semiconductor industry braces for the transition to 2nm technology, TSMC finds itself at a critical juncture. While it remains the leader in advanced chip manufacturing, the company faces increasing pressure from rivals like Samsung, who are working hard to capture market share with competitive 2nm offerings. Whether TSMC can maintain its dominance in the 2nm race or whether it will lose out to a more cost-effective Samsung process remains to be seen. For now, the coming years will be pivotal for both companies as they battle for supremacy in the rapidly evolving semiconductor landscape.
