TSMC Will Reportedly Charge $20,000 Per 3nm Wafer

Wafer
(Image credit: Shutterstock)

TSMC will reportedly hike the pricing of wafers processed using its leading edge N3 (3nm-class) process technology by 25% compared to N5 (5nm class) production node. This will immediately make complex processors like GPUs and smartphone SoCs more expensive, which will make devices like graphics cards and handsets costlier. Meanwhile, prohibitively high costs will make multi-chiplet designs more appealing.

One wafer processed on TSMC's leading edge N3 manufacturing technology will cost over $20,000 according to DigiTimes (via @RetiredEngineer). By contrast, an N5 wafer costs around $16,000, the report says.

There are many reasons why making chips on N5 and N3 production nodes is expensive. First up, both technologies use extreme ultraviolet (EUV) lithography pretty extensively for up to 14 layers in N5 and even more with N3. Each EUV tool costs $150 million, and multiple EUV scanners have to be installed in a fab, which means additional costs for TSMC. Also, it takes a long time to produce chips on N5 and N3, which again means higher costs for TSMC.

TSMC's Alleged Wafer Pricing

TSMC doesn't generally reveal prices for its wafers, except to actual customers. It's also important to note that contract pricing — what larger orders from companies like Apple, AMD, Nvidia, and even rival Intel are likely to use — may be lower than the base prices. Still, here's what the report says about current prices.

Swipe to scroll horizontally
Price per Wafer$20,000$16,000$10,000$6,000$3,000$2,600$2,000
NodeN3N5N7N10N2840nm90nm
Year2022202020182016201420082004

Chip developers who use TSMC's services are expected to pass the costs of new chips on to downstream customers, which will make smartphones and graphics cards more expensive. Even now, Apple's iPhone 14 Pro starts at $999, whereas Nvidia's flagship GeForce RTX 4090 is priced at $1,599. Once companies like Apple and Nvidia adopt TSMC's N3 node, we can expect their products to get even more expensive.

Of course the actual chip cost can still be relatively small compared to all the other parts that go into a modern smartphone or graphics card. Take Nvidia's AD102, which measures 608mm^2. Dies per wafer calculators estimate Nvidia can get about 90 chips from an N5 wafer, or a base cost of $178 per chip. Packaging, PCB costs, components, cooling, etc. all contribute probably at least twice that much, but the real cost is in the R&D aspects of modern chip design.

Swipe to scroll horizontally
Header Cell - Column 0 N3E vs N5N3 vs N5
Speed Improvement @ Same Power+18%+10% ~ 15%
Power Reduction @ Same Speed-34%-25% ~ -30%
Logic Density1.7x1.6x
HVM StartQ2/Q3 2023H2 2022

While there are rational reasons why TSMC's prices are getting higher, it should be noted that that the company can get away with it as it currently doesn't have any rivals that can produce chips using a leading edge fabrication technologies with decent yields and in high volumes. While formally Samsung Foundry is ahead of TSMC with its 3GAE process technology (3nm-class, gate all around transistors), it is believed that it is used only for tiny cryptocurrency mining chips due to insufficient yields. Meanwhile, Samsung Foundry's 4nm-class process technology did not live up to expectations as far as performance is concerned.  

When (and if) Samsung and Intel Foundry Services offer process technologies that outperform those of TSMC, the world's largest foundry will have to somewhat limit its prices, although we do not expect chip prices to drop because of intensified competition on the foundry market as fabs are getting more expensive, chip development costs are rising, and fabrication technologies are getting more complex.  

In general, the costs of making chips on leading edge nodes began to rise rapidly in mid-2010s when Intel, GlobalFoundries, Samsung, TSMC, and UMC adopted FinFET transistors. At the time costs rose for everyone despite intense competition between contract semiconductor manufacturers.

TSMC's first client to use N3 is expected to be Apple, which can afford developing an appropriate SoC, produce it in high volume, and still make money on its hardware. Apple has not indicated what kind of processors the company plans to make on N3, but a follow-up to the current M2 and A16 Bionic seems logical. Other chip developers may hold off using TSMC's N3 for now because of its prohibitively high costs and use chiplet-based designs instead due to lower development costs, lower risks, and lower production costs.

Again, please note that TSMC does not comment on its quotes and has not commented on information that it will charge ~$20,000 per N3 wafer. Those figures come from industry insiders and may or may not reflect actual high volume prices.

(Image credit: TSMC)
Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • TechieTwo
    This is called "telegraphing". It's a means to condition consumers for significant price hikes on coming products.
    Reply
  • logainofhades
    As long as yields are good, you get more chips per wafer, on a smaller node, which should help alleviate some of the brunt of this price increase.
    Reply
  • elforeign
    Pretty soon modern electronic devices are going to become extremely cost prohibitive for the mainstream individual. More and more the technologies used to power our devices, being manufactured on the cutting edge, are just not going to be affordable.

    I don't really see how we will get costs under control given the extremely low tolerances for defects in many of the production steps for semiconductors, on top of the extremely low tolerances for impurities in everything from the ultra-pure water to the etching and deposition, and overall in the sourcing of the rare-earths and raw materials that compose the lithography machinery and the end products.
    Reply
  • PlaneInTheSky
    Taiwan's monopoly on chips, motherboards and many other electronics is bad for everyone. It's bad for human development worldwide.
    Reply
  • logainofhades
    PlaneInTheSky said:
    Taiwan's monopoly on chips, motherboards and many other electronics is bad for everyone. It's bad for human development worldwide.

    It isn't a total monopoly. Intel makes most of their own chips and chipsets. I think they outsource some older nodes, but their cutting edge stuff, I believe is all them. Samsung is another player in the game, for electronics, and based in Korea, with plants all over the world. Micron is a US based company with manufacturing sites all over the world. Texas Instruments is another US Based company. SK-Hynix is Korean with fabs in multiple countries as well.
    Reply
  • PiranhaTech
    AMD's chiplet strategy is making a lot of sense. Smaller, simpler chiplets for the new stuff, plus some things like the I/O being on a more solid, older node just makes sense

    GamersNexus had an interview with an AMD engineer that was really good
    Reply
  • tommo1982
    So much for the promise of cost reduction on EUV.
    Reply
  • kjfatl
    elforeign said:
    Pretty soon modern electronic devices are going to become extremely cost prohibitive for the mainstream individual. More and more the technologies used to power our devices, being manufactured on the cutting edge, are just not going to be affordable.

    I don't really see how we will get costs under control given the extremely low tolerances for defects in many of the production steps for semiconductors, on top of the extremely low tolerances for impurities in everything from the ultra-pure water to the etching and deposition, and overall in the sourcing of the rare-earths and raw materials that compose the lithography machinery and the end products.
    There was a time, not too long ago where electronic products had long lifecycles. When I was a young pup, my manager told me a story about when he first started work. He was hired in the 1950's and his first project was an electronic multiplier for a business machine. Vacuum tube electronics. The product worked well, but the company put it on the shelf for 10 years. In the early 1960's the company pulled it off the shelf and sold it for over 10 years. We are headed in the same direction with IC's. The Intel I-19 and the Ryzen 17000 may have 20 year lifetimes. There will still be a place for exotic high end machines, but their use will be limited. Intel's tic-toc might still happen, with a new rev every 5 years.
    Reply
  • tommo1982
    kjfatl said:
    There was a time, not too long ago where electronic products had long lifecycles. When I was a young pup, my manager told me a story about when he first started work. He was hired in the 1950's and his first project was an electronic multiplier for a business machine. Vacuum tube electronics. The product worked well, but the company put it on the shelf for 10 years. In the early 1960's the company pulled it off the shelf and sold it for over 10 years. We are headed in the same direction with IC's. The Intel I-19 and the Ryzen 17000 may have 20 year lifetimes. There will still be a place for exotic high end machines, but their use will be limited. Intel's tic-toc might still happen, with a new rev every 5 years.
    I wouldn't mind that to be honest. It's a race who's the fastest no matter what now. They could, I mean AMD, Intel, Nvidia take their time and refine their technologies.
    I read once, people did things with Amiga that it wasn't designed for. Simply because it was as it is. No option to upgrade. Now they just slam it with more compute power and don't care about the rest.
    Reply
  • kjfatl
    I suspect that gaming as a major technology driver is over. The next big thing is probably self driving vehicles. This market will be quite different though with 50 or fewer real customers like GM and Toyota choosing what is 'good enough' for most vehicles. The hard part for vehicles is keeping the compute costs under $5000/vehicle and still getting the job done. On the other side, repurposing the powerful vehicle computers as a gaming machines could be quite interesting.
    Reply