TSMC to Customers: It's Time to Stop Using Older Nodes and Move to 28nm
by Anton Shilov on June 29, 2022 9:00 AM EST
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technologies is higher: UMC gets 80% of its revenue on 40 nm higher nodes, whereas 81.4% of SMIC's revenue come from outdated processes.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).
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Blastdoor - Wednesday, June 29, 2022 - link
The most effective way to encourage customers to switch is to raise prices on the old nodes. Maybe this is TSMC sending customers a heads-up that such price hikes are coming. If so, that's very chivalrous of them.ingwe - Wednesday, June 29, 2022 - link
With relatively few places, immediately going to a price increase is not a great way to do things. Even if TSMC is the 600 lb gorilla, it is better to work with companies as a partner.Of course it could be that they have already raised prices and are just having trouble keeping the older nodes running. If you don't have enough engineering resources to allocate to alternate part qualification, all the money in the world won't necessarily solve that problem.
astroboy888 - Wednesday, June 29, 2022 - link
Funny thing is that they might have to. Given the level of mass expansion on 28nm capacity, it might be cheaper for TSMC to manufacture in 28nm than maintaining older 40nm or 90nm technology. 28nm yield must be high 90% by now, same as 40/90nm nodes.Or cut price on 28nm nodes when full capacity comes on line.
StevoLincolnite - Tuesday, August 16, 2022 - link
Contracts may bind them to a fixed price.Kamen Rider Blade - Wednesday, June 29, 2022 - link
With increased Fab Waffer demands on older nodes & limited capacity, you can't expect TSMC to build out older fabs.What exists will stay there, but if TSMC is going to build out older nodes, it seems 28nm will be TSMC's process node choice.
Jorgp2 - Wednesday, June 29, 2022 - link
Do they have a cost reduced version of 28nm?astroboy888 - Wednesday, June 29, 2022 - link
TSMC is expanding 28nm capacity in Taiwan. Building a new 28nm fab in Japan, and expanding the Nanjing 28nm fab in China. Cost is going to be reduced because of scale.back2future - Wednesday, June 29, 2022 - link
smaller nodes are tending towards shorter longevity, generally (>1-2[-3]decades \-\> <1decade?)Duncan Macdonald - Wednesday, June 29, 2022 - link
For many of the smaller integrated circuits moving to a smaller node (eg 90nm to 28nm) would not result in any increase in the number of working chips per wafer as the size of the chips is limited by the space needed for external connections (pins) and/or the power dissipation and/or the required working voltage. (As an example the circuitry of a 555 timer would probably fit inside a 5um square on a 28nm process - but the 8 connecting pins would constrain the chip to being much larger - the minimum bonding wire size is over 17um.)With a new process requiring new masks (not cheap), more testing (to ensure that the new design still meets all the requires parameters (especially voltage and current ratings) and possible regulatory approvals (if used in a medical or nuclear field) there is not likely to be a stampede to the smaller nodes.
noobmaster69 - Wednesday, June 29, 2022 - link
Duncan, all of that is true, but there’s additional considerations as well.First, depending on what node a customer may be migrating from, the wafer itself may be significantly larger at 28nm than the older node. If so, the customer is going to get many more chips/wafer even if the chip size sees no reduction in size.
Second, we know TSMC is raising pricing across the board. News this week was a 6% price hike across the board for next year on top of previously announced 25% price hikes on all ‘legacy’ nodes - including all those customers already on 28nm. This is going to help pay for the cost of expanding the 28nm production capacity and possibly helping defray the cost to customers having to redesign their chips and make new masks. There’s huge economic upside for TSMC to retire as many of the older legacy nodes as possible and reclaim fab space.
Lastly, to the extent they can reclaim fab space by completely shutting down some older process nodes, they can repurpose the fab for leading edge nodes. The lithography equipment may be disposed of, but the fab itself - the water filtration, clean room, automation tools, etc - can still be used for leading edge nodes. That is a not an insignificant cost savings to expanding production at the leading edge, and the economic benefits of doing so makes subsidies to moving customers off older nodes very compelling. Eg spend $500m to help transition older customers off legacy nodes and make available $5B of fab space that would otherwise require new construction.