TSMC in trouble, banks refuse to finance their 3 nm

At a time like we are living with chip shortages wreaking havoc in all areas of the market, many eyes are on TSMC right now as the world’s largest semiconductor manufacturer. The supply of chips with advanced lithography worldwide depends to a great extent on this and it is logical that although they are already at 100% of their capacity in current nodes, the following lithography at 3 nm is seen with good eyes as a possible solution to the current shortage. However, it seems that the problems for the company have already started.

The 3 nm of TSMC in danger if they do not find investors

TSMC’s current performance is quite good and many investment banks are optimistic about the future of the company. However, some investment banks have already expressed quite the opposite view, believing that TSMC is overvalued, calling its share price ‘neutral’ and lowering its target share price by around 20%, causing a notable drop in company bag.

An important factor in this small TSMC decline is the 3nm process. Originally, TSMC expected to start mass manufacturing the wafers for this lithograph in early 2022, but rumors have recently surfaced stating that this date will be postponed and, even if not postponed, manufacturing and commissioning of this is anticipated. Lithography will require a huge amount of money that will significantly increase the cost, leading TSMC foundries to a price increase that could cause them to lose their key advantage in the market, which is cost per wafer.

Currently, their gross profit margin is expected to be below 50% for 2022-2023, below the 52% which is what they expected and so they indicated in their last financial results meeting.

In addition to the high cost of 3nm technology, TSMC’s advanced technology will also be affected by other technologies such as 3D packaging that the industry is rapidly adopting right now. This technology can also reduce energy consumption by not relying entirely on process scale technology, which is why banks and investors have yet another reason not to look so favorably on the 3nm TSMC.

Are the 3 nanometers in danger?


Definitely not. 3nm is TSMC’s next target and all of their efforts are going into the development of this new lithograph. That the company loses the confidence of investors may mean that they have to delay even more the arrival of this new technology, but with all that they have invested, it is already quite difficult for them to decide to completely stop its development.

TSMC is big enough to take on the development and construction of the relevant factories on its own, without the need for investors, but obviously this will be a serious blow to the financial situation of the company and, in addition to slowing everything down, could mean that the sale price of the products with this lithograph goes up even more because obviously they will seek to make the investment profitable as soon as possible. In any case, it is difficult for a company like TSMC to run out of investors, and even if some banks decide to withdraw their support, there will be many others who will keep it.

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