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TSMC to Customers: It’s Time to Stop Using Older Nodes and Move to 28nm

We tend to discuss leading-edge nodes and the most advanced chips made using them, but there are thousands of chip designs developed years ago that are made using what are now mature process technologies that are still widely employed by the industry. On the execution side of matters, those chips still do their jobs as perfectly as the day the first chip was fabbed which is why product manufacturers keep building more and more using them. But on the manufacturing side of matters there’s a hard bottleneck to further growth: all of the capacity for old nodes that will ever be built has been built – and they won’t be building any more. As a result, TSMC has recently begun strongly encouraging its customers on its oldest (and least dense) nodes to migrate some of their mature designs to its 28 nm-class process technologies.

Nowadays TSMC earns around 25% of its revenue by making hundreds of millions of chips using 40 nm and larger nodes. For other foundries, the share of revenue earned on mature process technologies is higher: UMC gets 80% of its revenue on 40 nm higher nodes, whereas 81.4% of SMIC’s revenue come from outdated processes. Mature nodes are cheap, have high yields, and offer sufficient performance for simplistic devices like power management ICs (PMICs). But the cheap wafer prices for these nodes comes from the fact that they were once, long ago, leading-edge nodes themselves, and that their construction costs were paid off by the high prices that a cutting-edge process can fetch. Which is to say that there isn’t the profitability (or even the equipment) to build new capacity for such old nodes.

This is why TSMC’s plan to expand production capacity for mature and specialized nodes by 50% is focused on 28nm-capable fabs. As the final (viable) generation of TSMC’s classic, pre-FinFET manufacturing processes, 28nm is being positioned as the new sweet spot for producing simple, low-cost chips. And, in an effort to consolidate production of these chips around fewer and more widely available/expandable production lines, TSMC would like to get customers using old nodes on to the 28nm generation.

“We are not currently [expanding capacity for] the 40 nm node” said Kevin Zhang, senior vice president of business development at TSMC. “You build a fab, fab will not come online [until] two year or three years from now. So, you really need to think about where the future product is going, not where the product is today.”

While TSMC’s 28nm nodes are still subject to the same general cost trends as chip fabs on the whole – in that they’re more complex and expensive on a per-wafer basis than even older nodes – TSMC is looking to convert customers over to 28nm by balancing that out against the much greater number of chips per wafer the smaller node affords. Therefore, while companies will have to pay more, they also stand to to get more in terms of total chips. And none of this takes into account potential ancillary benefits of a newer node, such as reduced power consumption and potentially greater clockspeed (performance) headroom.

“So, lots of customers’ product today is at, let’s say 40 nm or even older, 65 nm,” said Zhang.  They are moving to lower advance nodes. 20/28 nm is going to be a very important node to support future specialty. We are working with customer to accelerate [their transition]. I think the customer going to get a benefit, economic benefit, scaling benefit, you have a better power consumption.  but they’ve already got a chip that works. Why? Oh, then you could say why we do advanced technology. Yeah. Yeah. I mean, it’s, uh, find just the nature of the summit is you go to a next node, you get a better performance and better power and overall you get a system level benefit.”

In addition to multiple 28nm nodes designed for various client applications, TSMC is expanding its lineup of specialty 28nm and 22nm (22ULP, 22ULL) process technologies to address a variety of chip types that currently rely on various outdated technologies. As with the overall shift to 28nm, TSMC is looking to corral customers into using the newer, higher density process nodes. And, if not 28nm/22nm, then customers also have the option of transitioning into even more capable FinFET-based nodes, which are part of TSMC’s N16/N12 family (e.g., N12e for IoT). Read MoreAnandTech

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