According to TrendForce research, Intel plans to outsource the tGPU chipset in Meteor Lake to TSMC for manufacture. Mass production of this product was initially planned for 2H22 but was later postponed to 1H23 due to product design and process verification issues. Recently, the product’s mass production schedule has been postponed again to the end of 2023 for some reason, nigh completely cancelling 3nm production capacity originally booked in 2023 with only a marginal amount of wafer input remaining for engineering verification.
TrendForce indicates that this incident has greatly affected TSMC's production expansion plan, resulting in Apple being the one company among the first wave of 3nm process clients from 2H22 to the start 2023 with products including M series chips and A17 Bionic. In view of this, TSMC has decided to slow the progress of its production expansion to ensure production capacity is not excessively idle, leading to massive cost amortization pressure. In addition to formally notifying equipment suppliers of the company’s intention to adjust 2023 equipment orders, due to the high cost of 3nm expansion, TrendForce expects that this move will also affect some parts of TSMC’s 2023 CapEx planning. As a result, the scale of TSMC’s CapEx in 2023 may be lower than in 2022.
It is worth mentioning, although Intel has significantly adjusted its 2023 outsourcing plan, causing TSMC to postpone its 2023 expansion plans, looking at other advanced process clients including AMD, MediaTek, and Qualcomm, all of these companies successively plan to mass-produce 3nm products in 2024. At the same time, Apple's new 2024 iPhone is expected to fully adopt 3nm processors. The introduction of the aforementioned clients will inject momentum into TSMC's 3nm capacity utilization and revenue performance in 2024.
TrendForce believes, although TSMC has decided to curb its CapEx in 2023 due to the delay of Intel products, TSMC's annual revenue will still grow compared with 2022 but at a slower rate. The reduction in CapEx can also relieve TSMC’s huge cost amortization pressure and reduce the degree of gross profit dilution in the early stage of 3nm mass production.
Looking forward to 2024, with new products from clients such as AMD, MediaTek, and Qualcomm in place, 3nm process output is expected to be on track, further promoting strong growth in TSMC's revenue scale. However, the development status of Intel's own Intel 4 process and the accompanying outsourcing situation are still important potential growth drivers for TSMC. If Intel 4 fails to mass-produce as scheduled, Intel may outsource its computing tiles to TSMC, strongly driving growth in 2024. However, if the Intel process develops smoothly, there remains the possibility of the company choosing to manufacture related products itself and canceling TSMC's orders.
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