Advanced Micro Devices (AMD) has reportedly increased its electronic component orders from the Taiwanese Semiconductor Manufacturing Company (TSMC). In the past, the Santa Clara, California chipmaker had TSMC and GlobalFoundries make its 14nm and 12nm components.
In January, market analysts predicted AMD would become TSMC’s biggest 7nm customer by the end of 2020 as its technological needs have evolved.
Why AMD wants TSMC to Make its Products
At present, AMD is in the middle of a major growth phase that kicked off in the aftermath of the coronavirus outbreak. Web service providers and newly remote workers snapped up the firm’s product to adjust to the requirements of the work-from-home era. If the chipmaker is to continue expanding its business, it will need consistent output of 7nm chips.
As the world’s largest contract semiconductor manufacturer, TSMC has the production capacity and technical expertise to meet AMD’s needs.
Earlier this year, the Taiwanese company could reportedly fabricate 110,000 7nm wafers per month. The firm can maintain a robust level of output because it operates 13 fabs and two backend facilities. In addition, its N7 process technology offers high yield rates of current generation electronic components.
With TSMC’s support, AMD can pursue its market share expansion plans without worrying about any momentum-sapping production chokepoints.
How TSMC Benefits From Taking on AMD’s 7nm Business
TSMC’s recent ascension to the top of the semiconductor industry is due to its production innovation as well as its dependability.
Currently, it is the only company capable of mass-producing 5nm nodes and will begin volume manufacturing of 3nm wafers by 2023. For that reason, Apple, Nvidia, Qualcomm, NXP Semiconductors, and Tesla have made the firm their foundry of choice. But to keep its income consistent, the corporation needs to ensure its older processes remain in use.
Unfortunately, TSMC’s advanced capabilities can sometimes clash with its financial needs.
Apple recently moved to fill up the manufacturer’s 5nm production schedule through year’s end with orders for its A14 chipsets. On the one hand, that development justifies TSMC’s decision to develop new chip processing technology. But on the other, the transition also means there is less demand for its old 7nm wafers.
Because of its high development costs, the Taiwanese firm cannot afford for its factories to operate under capacity. But as Seeking Alpha points out, AMD still needs 7nm nodes for many of its mid-tier and lower-end processors.
The company’s less advanced chipsets are popular among Chromebook manufacturers. Since the low-cost laptops have emerged a preferred post-coronavirus remote learning equipment solution, demand for AMD’s older central processing units (CPUs) will likely remain strong.
So, AMD ramping up its orders with TSMC should be a mutually beneficial arrangement.