3nm Customer Cancels Order

A dramatic scene is emerging in the semiconductor industry. In the past two years, all kinds of shortages and price hikes are no longer popular. Now the industry is worried about all kinds of order cuts, and Taiwan Semiconductor Manufacturing Co., which is the largest wafer contract manufacturer, will not be spared.

TSMC announced a reduction in annual CAPex from $40 billion to $36 billion in its earnings report. A few days ago, CEO Richard Wei sent an internal letter encouraging everyone to take a vacation, except for employees of the 3nm process, which TSMC is about to mass-produce.

Previously, the first generation of 3nm process N3 was cancelled due to high cost and few customers. The mass production is mainly the second generation N3E process, which is more cost efficient and is used by Apple, AMD, NVIDIA and even Intel, etc. Now there is news that some customers have temporarily and urgently cancelled the 3nm order.

The customer was not identified, but either customer cancelling the 3nm order is now a blow to TSMC. After all, the 3nm process cost $20 billion to build, and without the customer, it will be difficult to recoup the investment.

At the same time that customers are cancelling orders, TSMC is also cancelling purchase orders of up to 40 to 50 per cent in areas such as recycled wafers, key consumables and equipment.

Privately, TSMC also acknowledged the decline in orders, which began at the end of the third quarter and continued to fall in the third quarter and the first quarter of next year.