TSMC’s 2nm Node Sees Higher Demand Than 3nm Even Before Launch

Robert Novoski

Even though TSMC’s 5nm & 3nm technologies are leading the revenue charts, it looks like the next generation 2nm process nodes are seeing higher demand.

Although 3nm & 5nm generate higher revenues, 2nm exceeds demand according to TSMC

TSMC’s quarterly earnings report is out and the company is now in a better position than ever. TSMC saw huge profits in Q3 2024, surpassing last year’s record, which company leaders say will continue for the next five years. Additionally, we can see that smaller process nodes now ship the most to their customers, resulting in more revenue than larger, older process nodes.

As reported by EDN and MoneyDJ (via TrendForce), TSMC confirmed that AI demand is real and foundries are expected to grow significantly in the next five years. At the moment, 5nm process node of companies earned the most revenue according to Q3 2024 reports, earning almost 32% of all revenues combined.

Image Credit: Trendforce.com

Next is 3nm, which secures 20% of total profits, followed by 7nm with 17% profits, etc. Based on the graph, the company’s Gross Margin has increased by 57.8% in Q3 2024namely about 3.5% higher compared to that seen in Q3 2023 and is the largest this year. As far as company earnings go Up 36% YoY with 23.50 billion in Q3 2024compared with 17.28 billion in Q3 2023.

Although the pie chart currently shows the dominance of 5nm and 3nm process nodes, 2nm shipments are expected to outperform both nodes when they start shipping. Currently, the company is seeing higher interest from its customers towards 2nm nodes compared to 3nm. Mass production for the 2nm node is expected to start in 2025, which is on schedule and until then the 3nm process node will be the main revenue driver until 2026.

TSMC’s 2nm process manufacturing units in Baoshan and Kaoshiung are expected to produce 30,000 and 35,000 wafers respectively, but will exceed 100,000 wafers by 2027. Apple, NVIDIA, and AMD are expected to be the first customers for the 2nm node, and with them a growing desire to produce high-performance chips, the 2nm node is expected to be utilized more than the 3nm node.

However, competition will not be easy for TSMC as Samsung has started production of its own 2nm process node and will expand its operations by producing 1.4 mm nodes. Next is the A16 process node, which will enter mass production in 2026 and is already attracting customers. It will be interesting to see the competition between these two foundries over the next few years as the company that gets the most orders from giants like NVIDIA and Apple will have the upper hand.

News Source: TrendForce

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