According to media reports, $Taiwan Semiconductor (TSM.US)$ The price of each 300mm 2nm wafer may exceed 0.03 million US dollars, higher than the previously expected 0.025 million US dollars, which is twice the price of 4/5nm wafers.

According to reports, the first customer to try out the N2 advanced process is very likely to be the tech giant Apple. In addition, Taiwan Semiconductor and chip packaging company Amkor recently announced that the two companies have signed a memorandum of understanding to collaborate on chip production, packaging, and testing in Arizona, USA. However, the above news has not yet been confirmed by Taiwan Semiconductor.

Let's take a detailed look at the report.

Significant Breakthrough Reported by Taiwan Semiconductor

According to multiple media reports, Taiwan Semiconductor has made a significant breakthrough in the 2nm process node, introducing Gate-all-around FETs (GAAFET) transistor technology for the first time. In addition, the N2 process combines NanoFlex technology, providing chip designers with unprecedented flexibility in standard components.

However, the above information has not yet been confirmed by Taiwan Semiconductor.

According to reports, compared to the current N3E technology, the N2 technology is expected to achieve a 10% to 15% performance improvement at the same power, or reduce power consumption by 25% to 30% at the same frequency. More notably, transistor density will increase by 15%, signaling another leap forward for Taiwan Semiconductor in the semiconductor technology field.

However, with the upgrade of technology, costs are also expected to rise accordingly. It is predicted that the price of each 300mm 2nm wafer from Taiwan Semiconductor may exceed 0.03 million dollars, higher than the earlier estimate of 0.025 million dollars. In comparison, the current price range for 3nm wafers is about 0.0185 million to 0.02 million dollars, while 4/5nm wafers hover between 0.015 million and 0.016 million dollars. Clearly, there will be a significant increase in the price of 2nm wafers.

Taiwan Semiconductor is constructing two wafer fabs to manufacture chips using its 2nm-level technology and is investing billions of dollars in purchasing extremely expensive EUV lithography equipment (each device approximately 0.2 billion dollars). In addition, the N2 technology will utilize a variety of innovative production techniques, which will result in higher costs for Taiwan Semiconductor compared to N3E. Generally, N2 may involve more EUV lithography steps, thereby increasing its costs. For example, Taiwan Semiconductor may need to revert to EUV double patterning with N2, increasing its costs, so it is reasonable for foundries to pass on these additional costs to customers.

Analysts in the semiconductor industry point out that the investment in advanced processes by wafer fabs is tremendous. For instance, the R&D investment for the 3-nanometer process exceeds 4 billion dollars, with critical support from the supply chain. These investments have brought significant revenue growth to Taiwan Semiconductor and its supply chain partners such as IP providers and related process consumables factories.

As the development costs for advanced processes increase exponentially, senior IC designers revealed the cost changes from 28 nanometers to 5 nanometers. The development cost for 28 nanometers is approximately 0.05 billion dollars, increasing to 0.1 billion dollars for 16 nanometers. By the time it advances to 5 nanometers, the cost has risen to 0.55 billion dollars, including IP licensing, software verification, design architecture, and other aspects. For foundries, the investment is even more substantial. For example, for the 3-nanometer process, research institutions suggest an investment of 4 billion to 5 billion dollars, and the cost of building a 3-nanometer factory is at least around 15 billion to 20 billion dollars.

Supply chain operators state that the investment in advanced processes is a long and resource-intensive process, involving research and development personnel, equipment, software, materials, and more, often taking 7 to 10 years. Taking the 2-nanometer process as an example, its trajectory was quite clear by 2016, but the details of the production schedule only gradually became clear recently.

With the expected launch of the 2-nanometer process in 2025, supply chain operators are poised for a period of explosive profit growth. In addition, due to the need to grind wafer to even thinner levels in the 2-nanometer process, there are also opportunities for materials such as silicon and Ascendia semiconductors to enter diamond disks, regenerated wafers, and other fields. In terms of regenerated wafers, the value of 2 nanometers is about 4.6 times that of 28 nanometers. As gate control chips enter advanced processes, the quantity of chips will also increase accordingly. For industry participants, this will be a business opportunity with rising both in quantity and price.

Taiwan Semiconductor is the world's largest semiconductor foundry, providing chip manufacturing and advanced packaging technology services to clients like NVIDIA. $Apple (AAPL.US)$Please use your Futubull account to access the feature.$NVIDIA (NVDA.US)$ In terms of performance, Taiwan Semiconductor's second-quarter combined revenue was 673.51 billion New Taiwan dollars, a year-on-year increase of 40.1%, exceeding analysts' expectations. Net income reached 247.85 billion New Taiwan dollars, up 36.3% year-on-year, also surpassing expectations.

Taiwan Semiconductor's August sales increased by approximately 33% year-on-year, reaching 250.87 billion New Taiwan dollars. JPMorgan stated that Taiwan Semiconductor's revenue so far in the third quarter has already reached 68% of JPMorgan's expectations. The company's strong sales in August indicate that third-quarter performance may exceed its guidance. The firm maintains an 'overweight' rating on the stock with a target of 1200 New Taiwan dollars.

In the secondary market, Taiwan Semiconductor's stock price has risen by nearly 65% year-to-date, with a current market cap of 25.34 trillion New Taiwan dollars, equivalent to approximately 5.5 trillion yuan.

Apple taking the lead for the first time?

It has been reported that taiwan semiconductor has planned to officially enter the mass production phase of the N2 process in the second half of 2025, with customers expected to receive the first batch of chips manufactured using the N2 process as early as 2026. The first customer to experience this advanced process is likely to be the technology giant apple.

Some analysts also believe that if the quoted price of 0.03 million US dollars per wafer is accurate, whether it makes great economic sense for all customers of taiwan semiconductor to use N2 instead of N3 (increasing performance and reducing power consumption while achieving 15% transistor density) remains to be seen. Apple is preparing to use N2 in the second half of 2025 because it needs to improve processors for iPhone, iPad, and Mac every year (although it is expected that these products will only obtain the N2 chip in 2026). Other major customers usually catch up with apple within 1.5 to 2 years, so the price may be lower by then.

This Thursday, taiwan semiconductor and chip packaging company Amkor announced that the two companies have signed a memorandum of understanding to collaborate on chip production, packaging, and testing in the state of Arizona, USA.

In a press release, the two companies stated that their factories in Arizona are very close, which will accelerate the entire chip manufacturing process. Under the agreement, taiwan semiconductor will utilize the one-stop advanced packaging and testing services provided by Amkor's newly built factory in Peoria, Arizona. Taiwan semiconductor will use these services to support its customers, especially those using its advanced wafer manufacturing facilities in Phoenix. The close cooperation between taiwan semiconductor's front-end wafer manufacturing plant and Amkor's back-end packaging and testing plant in Arizona will shorten the overall product production cycle.

taiwan semiconductor had earlier committed to building a $40 billion chip manufacturing plant in Phoenix, Arizona, laying the foundation for this deal with Amkor.

Apple confirmed last year that Amkor will package the Apple Silicon chips produced at the nearby taiwan semiconductor factory. Technology journalist Tim Culpan recently reported that taiwan semiconductor's US factory has begun small-scale production of the A16 chip, which first appeared in the iPhone 14 Pro model two years ago, and will also be used in the iPhone 15 and iPhone 15 Plus models.

Editor/Somer