Taiwanese Semiconductor Manufacturing Company (TSMC) is developing a new chip packaging technique with Google and Advanced Micro Devices (AMD). Nikkei Asia reported the contract chipmaker wants to offer its advanced backend service to its top clients.
The company is working to increase its chip packaging capability to bolster its revenue and reinforce its client relationships.
TSMC’s New Chip Packaging Service
TSMC is the world’s largest contract chipmaker because of its best-in-class fabrication technology and robust production capacity. However, the company traditionally outsources one aspect of the semiconductor manufacturing process: chip packaging. In the past, it has relied on firms such as ASE Technology Holding and Amkor to stack and connect different integrated circuits (ICs) into singular high-performance chips.
According to Nikkei Asia, TSMC changed its strategy as it now wants to handle more packing tasks in-house.
The corporation recently developed a 3D packaging platform called TSMC-SoIC for that purpose. The technique involves the heterogeneous integration of logic, memory, and sensor chips onto one die. The company notes its process enables the creation of small, high-performance chips that provide high power and signal integrity with minimal energy consumption.
Using the platform, TSMC could offer its customers advanced fabrication services while avoiding Moore’s law limitations.
Recently, the contract chipmaker teamed with Google and AMD to test and certify the quality of its TSMC-SoIC chips. Google reportedly wants to use the multifaceted components to further its autonomous vehicle ambitions, while AMD hopes the technology will give it an edge against perennial rival Intel.
TSMC plans to make its new service a bigger part of its business relatively quickly. The firm is building a packaging factory in Maioli, Taiwan, that will become operational in 2021 and begin mass production the following year.
Why TSMC is Getting into Chip Packaging
The primary reason TSMC is enhancing its chip packing services is it will give the corporation a new revenue stream. Since 2016, the firm has worked with Apple to produce powerful chipsets with integrated processing and memory functions. Last year, the company made $2.8 billion from that part of its business, which Bernstein Research states mostly came from the iPhone maker.
TSMC could substantially increase its revenue by extending its range of services. Yole Development estimates the advanced chip packaging market is worth $29 billion presently but will reach $42 billion in value by 2025. That said, the contract manufacturer is not looking to corner that particular market right now.
Nikkei Asia states TSMC only intends to offer its state-of-the-art backend service to its top-tier customers. The corporation’s strategy is to secure the long-term business of corporations like Google, AMD, and Apple by becoming a one-stop-shop.
The company is wise to take action now as its facing increased competition from Samsung. The South Korean conglomerate reportedly earmarked $116 billion to improve its foundry services over the next decade. Ultimately, the firm intends to utilize its advanced fabrication technology to become the world’s foremost contract chipmaker.
TSMC’s new packaging service will make it more competitive by upping its revenue and reaffirming its customer relationships. For consumers, its increased interest in packaging services will produce better electronics across multiple industries. In this instance, consumers will likely derive the greatest benefit from a ramp-up in competition between industry leaders.