Apple's chip supplier sees strong demand for 5G phones
Despite the current coronavirus pandemic, trade wars, and uncertain economic times ahead, the world's largest independent foundry sees strong growth in the near future. Taiwan Semiconductor Manufacturing Company (TSMC) is sinking billions more into its chip manufacturing business. Last week, the firm's board of directors announced (via The Register) that it was going to budget $6.74 billion to build more fabrication facilities and increase its production capacity.
TSMC says that the coronavirus has not led any of its customers to cut chip orders
Last month, the company said that it planned on spending between $14 billion and $15 billion for capital expenditures this year up from the $10 billion-$11 billion it spent last year. The 2020 spending includes $2.5 billion for its 5nm process chips and $1.5 billion for its 7nm chips. Let's back up a bit. What TSMC does is manufacture chips for companies that design their own components but don't have the facilities to actually produce them. That includes some of your giant tech companies like Apple, Qualcomm, Huawei, and others. Last week, TSMC said that the coronavirus has not led to any reduction in orders from its customers.
The process node refers to the number of transistors that can fit into a dense area like the inside of an integrated circuit. The lower the number, the larger the number of transistors inside a chip. That is important because as more transistors are placed inside an IC, the more powerful and energy-efficient it is. For example, Apple's current A13 Bionic SoC containing 8.5 billion transistors is manufactured using TSMC's enhanced 7nm process.
Starting in the middle of this year, the company will begin producing 5nm chips and the Apple A14 Bionic will reportedly be packed with 15 billion transistors making it more powerful and energy efficient than the A13 Bionic. This means that Apple could have a huge performance lead over most Android phones when it releases the 2020 iPhone models later this year. That's because the Qualcomm Snapdragon 865 Mobile Platform, the chip that will power most flagship Android phones in 2020, is manufactured by TSMC using its 7nm process node. The only Android phones that could match the 2020 iPhone's performance this year could be the Huawei Mate 40 line. That's because Huawei's 5nm flagship chipset is due to roll off of TSMC's assembly line later this year.
Speaking of the A13 Bionic, Apple recently told TSMC to increase production of the chip due to higher than expected demand for the iPhone 11 series. Additionally, the upcoming iPhone 9, due to be introduced next month, will employ the A13 Bionic chip. Reliable TF International analyst Ming-Chi Kuo believes that Apple could sell as many as 30 million iPhone 9 units this year and each one will be powered by the A13 Bionic chip. With a price rumored to start at $399 and up, the iPhone 9 will look just like the iPhone 8 but will sport the more powerful chip and include a 50% hike in memory from 2GB to 3GB of RAM.
As for the A14 Bionic, TSMC sees strong demand for the new 5G iPhone models that will be powered by this SoC. The latest rumor has Apple releasing four iPhone models this year including the iPhone 12 (5.4-inch screen, dual cameras), iPhone 12 Plus (6.1-inch screen, dual cameras), iPhone 12 Pro (6.1-inch screen, triple cameras) and the iPhone 12 Pro Max (6.7-inch screen, triple cameras). All four will be equipped with the TSMC built Snapdragon X55 5G modem chip which supports both sub-6GHz and mmWave 5G spectrum. That means the new iPhones will be compatible with the 5G signals disseminated by all four major U.S. wireless carriers.
Last year, the semiconductor industry had its worst year since the dot com collapse of 2001 with revenue declining 12% on an annual basis to $412 billion. But TSMC's decision to throw billions into new production facilities indicates that at least one of the industry's leading firms is confident that the business is turning around.