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TSMC says 3nm plant could cost it more than $20bn

TSMC FOUNDER Morris Chang has admitted that developing 3nm process manufacturing facilities will cost the company more than $20bn.

The foundry already invests more than $10bn every year to keep its manufacturing facilities up-to-date, enabling it to manufacture A-series microprocessors for Apple and to compete with Intel and Samsung, its two main rivals at the top-tier.

In an interview with Bloomberg, though, the 86-year-old TSMC chairman Chang suggested that the company would have to crank up its level of investment

“By the time we’re through, by the time we’ve built all the necessary capacity, I think we would have spent upwards of $15bnn,” Chang told Bloomberg. He continued: “That’s a conservative estimate. Maybe it’s safer to say upwards of $20bn.”

Chang was talking to Bloomberg as he prepares to retire fully from the company he founded, and which helped support the fabless semiconductor manufacturing industry.

He also warned that a number of upstart companies – largely Chinese – hoping to compete with TSMC could build more capacity than the market can support. Being able to offer the most advanced manufacturing facilities will enable TSMC to retain its profitability and competitiveness.

Chang added: “Technology, you can’t buy with just money… the Chinese strategy of expanding the semiconductor industry, I think it will have some success, but it will not have the success that perhaps the government was really looking for. It takes more time than they think.”

On announcing his retirement, Chang noted that TSMC’s sales growth in US dollar terms is around 10 per cent per year, but the company is expected to receive a boost from the two new Apple iPhones released last month – the iPhone 8 and the iPhone X.

Each successive generation of semiconductors costs more than the last, and companies need to keep spending to stay in the game. This also means that manufacturers are regularly forced out if they are unable to maintain or expand their market share – as the ever-shifting line-up in the world’s top-10 semiconductor manufacturing companies shows.

Hitachi, Sony, AMD and many others have all featured in the top-10 in the past, and either slipped up, sold-up or folded their interests with struggling rivals. µ

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