Taiwan Semiconductor Mfg. Co (NYSE:TSM) confirmed Friday that a manufacturing defect caused the Taiwanese foundry to scrap tens of thousands of wafers at their 12nm/16nm Fab 14 facility. TSMC investigated the matter and found that a ‘photoresist’ layer used an improperly treated compound that contained foreign polymers.
The damage? Upwards of $550 million dollars according to the world’s largest independent foundry company. Several companies have been cited as affected, perhaps most importantly graphics chip-maker NVIDIA (NASDAQ:NVDA).
The photoresist product is considered a raw material input by TSMC and the company did go on the record to say that a new source has already been established for new production runs moving forward.
12/16nm is TSMC’s flagship process, and while it is beginning to be supplanted by the next-gen 7nm process, it still contributes to the lion’s share of revenue to TSMC. All of NVIDIA’s current Geforce video cards, for instance, are fabricated on these production lines and its possible that a large volume of NVIDIA GPU chips was scrapped as a result of the manufacturing mishap. GPU chips indeed take several months from wafer-start to arriving on store shelves.
According to Semiconductor Engineering:
A 28nm device has 40 to 50 mask layers. In comparison, a 14nm/10nm device has 60 layers, with 7nm expected to jump to 80 to 85. 5nm could have 100 layers. So, using today’s lithographic techniques, the cycle times are increasing from roughly 40 days at 28nm, to 60 days at 14nm/10nm, to 80 to 85 days at 7nm.
A layer is said to take between 1 and 1.5 days at the 16nm process and given additional weeks for shipping, packaging, and testing it could easily be about 4 months before the chips being produced get in the hands of consumers. TSMC originally announced the issue in late January so its possible supplies may tighten up in the May-June timeframe.
If we say that 10,000 NVIDIA wafers were scrapped, and use the Geforce 2060 at 445mm^2, we can estimate that about 1.2 million of these chips aren’t going to be made as planned. While consumer prices could, in theory, be bumped due to a lack of supply, the more interesting thing would be to consider its impact on NVIDIA. 1.2M Geforce 2060’s would retail for $420 million!
However, NVIDIA, is a top-tier client of TSMC’s and surely they are getting priority in terms of fab allocation, so they probably won’t see anywhere near the potential effects outlined above. TSMC will do all that it can to get NVIDIA the chips that they ordered.
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