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AMD Shifts their 7nm Business to TSMC for 2019 Ryzen Processors as GlobalFoundries Dumps 7nm Technology

1 X cover Zen 2 AMD processor  7nm


Against the backdrop of GlobalFoundries' decision to dump 7-nanometer (nm) semiconductor manufacturing technology, Advanced Micro Devices (AMD), the designer of infamous Ryzen, announced the shift of its 7nm production to Taiwan Semiconductor (TSMC). 


In a blog post this week AMD said that its "work with TSMC on 7nm has gone very well," as it has already tapped out several products at TSMC, "including first 7nm GPU planned to launch later this year," and its "first 7nm server CPU" launching later in 2019


On one hand, AMD is in a position to negotiate a favorable wafer supply agreement with GlobalFoundries as a result of this development. On the other hand, this gives Taiwan Semiconductor additional pricing power as the only manufacturer of 7nm ICs in 2018.


GlobalFoundries granted AMD a limited waver that allows the chip designer to work with other foundries when GlobalFoundries can't provide the required services.


Not only is 7nm expensive, thanks to multi-patterning that's needed to enhance feature density of integrated circuits at 7nm and beyond, but the departure of GlobalFoundries from the 7nm scene gives Taiwan Semiconductor room for aggressive pricing.


TSMC will be the only manufacturer of 7nm chips during 2018; Samsung is expected to start manufacturing 7nm chips for third parties at some point in 2019. Taiwan Semiconductor is already manufacturing 7nm A12 for Apple (AAPL)'s upcoming iPhone. Qualcomm also has no choice but to manufacture its leading-edge Snapdragon at TSMC for now as Samsung's 7nm manufacturing will only be available for in-house products during 2018.


Lastly, the report noted that "For Taiwan Semiconductor, it's quite a positive development. As a lone manufacturer of 7nm chips, the company can negotiate favorable terms with Apple, Qualcomm and AMD, leading to a higher margin for the chip foundry."


While TSMC will have the power to raise prices, I highly doubt that TSMC would temporarily squeeze Apple who would have the option of shifting their chip business to Samsung in 2019 if prices were to materially change for iPhones this year.


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AMD Zen 2 processor 7nm



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