TSMC received $4 billion from customers to reserve future production capacity

  • 2021-11-21 22:03
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  • Recompile By Brian - CPU Review
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The big picture: TSMC, the world's largest foundry, said in its most recent financial report that it has accepted an unprecedented amount of upfront payment for its future production capacity in this year. Hopefully that money will accelerate the construction of new devices for making microprocessors. As computer manufacturers continue to fail to deliver hardware to consumers, attention has turned to foundries to find lasting solutions to chip shortages.

In the past, the main way TSMC allowed customers to reserve capacity was through a "security deposit," a one-time payment that would be refunded when a customer completes their order.

TSMC is continuing to receive guarantee deposits; in fact, about two-thirds of the NT$642 million ($23) security deposit they are holding has been paid out in the past nine months. But this year, the company shifted focus to "temporary receipts" for future capacity, which are effective prepayments.

TSMC signed a contract with NT$106 billion ($3.8 billion) in provisional receipts this year.

TSMC doesn't have to hold the money until it meets "the terms and conditions set forth in the agreements" with its customers, and so has rules about how it can be spent. But the idea is that TSMC will use it to create more production capacity for customers to buy.

TSMC's report did not disclose details of the agreements nor did it say who the customers were. At a guess, the biggest company is probably Apple, which mines TSMC for all of its iPhone and Mac SoCs. AMD may be lagging behind. Last month, AMD said it had prepaid US$355 million to various foundries this year. Qualcomm is probably there too.

Neither Intel nor Nvidia is heavily reliant on TSMC at the moment, but both are said to be discussing the production of their next-generation GPUs with the foundry. At some point in the future, TSMC may be the sole supplier of GPU chips.