Apple released the iPhone 15 series on September 13. Among them, the iPhone 15 Pro high-end model was first equipped with the A17 Pro. This TSMC 3nm process chip adopts a 6-core design, including 2 high-performance cores and 4 high-energy-efficiency cores. It integrates 19 billion transistors, improves single-thread performance by 10%, and increases graphics processing speed by 20%.
To boost gaming, the new chip supports a technology called ray tracing, which allows for smoother graphics and improved color accuracy. Apple emphasizes that this is the industry’s first mobile phone SoC chip using the 3nm process. The launch of 3nm represents the entry of a new generation of mobile chips into the consumer electronics market. However, the market is in a state of ice and fire: major manufacturers are competing for 3nm advanced technology and production capacity, but the weak end market and overall user experience have weakened their influence.
Can 3nm save the mobile phone market? A17Pro has little improvement
Counterpoint data shows that global smartphone sales in the second quarter of 2023 fell by 8% year-on-year and 5% quarter-on-quarter. They have declined for eight consecutive quarters, which also highlights the market's economic weakness and serious lack of demand. Smartphones are one of the most fiercely competitive markets for brands, and the SoC chips installed in them have become the key to competition in mobile devices. Market sources say the performance of the new A17Pro chip used in the latest iPhone 15 Pro series will determine the potential success of 3nm SoC, which may be crucial in driving the mobile phone market forward in 2024.
Although the performance of this generation of A17Pro chips has been improved, tests show that there is still a lot of room for improvement in terms of power consumption. In terms of benchmark data, Apple's A17Pro surpassed the previous generation A16 chip and Qualcomm's Snapdragon 8Gen2 released in 2022, and the internal large and small CPU cores also performed well. On the other hand, some benchmark tests have found that when the A17Pro chip is running at maximum efficiency, its power consumption exceeds the previous generation product standards and is even close to the Snapdragon 8Gen1, which has overheating issues. Apple has made major changes to the GPU architecture this time and increased the number of cores, but it still barely catches up with the Snapdragon 8Gen2 GPU specifications, which shows that Apple still has room for improvement in this regard.
Players familiar with mobile SoCs pointed out that the disappointment with A17Pro mainly stems from the past when mobile SoCs upgraded their manufacturing processes, such as moving from 7nm to 5nm. Both performance and energy efficiency were significantly improved, but this time it was not obvious. In addition, reducing the power consumption of mobile SoC has always been one of Apple's strengths. However, this time, not only is the performance improvement relatively limited, but the power consumption at maximum performance is also very high, dashing everyone's hopes that the 3nm process can significantly improve mobile SoCs.
3nmcell phonequestionedoverheat,TSMC is stillApple takes the blame?
Before the release of TSMC's 3nm chips, there were rumors that Apple signed an exclusive agreement with TSMC to bear the cost of defective chips. Specifically, TSMC will not charge Apple the full cost of producing wafers containing hundreds of chips. Instead, it only charges the company for "known good chips," for which TSMC's 3nm yields have reached 70%-80%. TSMC also benefits from Apple's willingness to support the development of its new chips. In response, TSMC responded by not commenting on business with a single customer, while emphasizing that 3nm yield and progress were good.
There have been recent reports that TSMC’s 3nm chips have caused the iPhone 15 Pro models to overheat, even to the point of being unable to be held in some cases. Analyst Ming-Chi Kuo said that the overheating problem of the iPhone 15 Pro model is not caused by the A17 Pro chip, which has nothing to do with TSMC’s 3nm process, but is caused by the internal heat dissipation system design and the new titanium surface. However, this also affects the user experience. Unless Apple reduces the performance of the A17Pro chip, it will also cause indirect damage to the performance of TSMC's 3nm chip.
3nm will be an advanced process that is hotly contested for a long time.
Smartphone manufacturers, fabless factories, wafer foundries, and semiconductor equipment manufacturers are still pursuing advanced processes. 3nm is expected to bring huge changes to the semiconductor market in the next decade. "At least by 2030, the 3nm process will become the mainstream process for foundry companies." A semiconductor industry insider said. "If chip manufacturers fail in this race, it will be difficult to make a comeback in the future." Chip manufacturers must achieve a decisive victory in the 3nm process game before reaching the 2nm process, because 2nm technology is considered the physical limit of the micro-manufacturing process.
It is reported that the application of 3nm chips will start with mobile APs, followed by high-performance computing (HPC) chips, artificial intelligence (AI) chips and automotive semiconductors. Its market size is expected to grow explosively. The 3nm foundry market will be valued at US$1.2 billion in 2022 and is expected to grow more than 20 times to US$24.2 billion by 2026.
TSMC’s 3nm process has been implemented on the A17Pro mobile phone application processor, and the 3nm production capacity in 2023 is expected to be covered by Apple. Samsung became the world's first company to mass-produce 3nm chips in 2022, but its main focus is still 4nm chips. Intel said it will begin manufacturing chips using the 3nm process in 2024, and may use TSMC and its own IFS foundry services for parallel production.
TSMC regards the 3nm process series as an important and long-lasting node for the company. According to reports, the foundry’s 3nm process output is currently expected to be approximately 65,000 wafers. However, since the initial orders for the iPhone 15 Pro will be lower than previous models, the 3nm process output in the fourth quarter is unlikely to reach the previously expected 80,000-100,000 wafers. However, the supply chain revealed that the number of TSMC's new 3nm tape-outs (Tape-Out) has surged, and major customers will increase production next year and the year after. TSMC's 3nm family (including N3E) monthly production capacity will increase to 100,000 pieces in the second half of next year.
TSMC is also working with MediaTek, which recently announced that it will use the foundry's 3nm process technology to develop its flagship Dimensity SoC, and is expected to start mass production of its first 3nm chip in the second half of 2024. Industry sources say that in addition to Apple and MediaTek, AMD, Nvidia, Qualcomm, and Intel have also confirmed that they will introduce the N3 family process.
3nm will continue to be optimized. Taking TSMC as an example, the first 3nm process node N3B will begin mass production in the second half of 2022, and the enhanced 3nm (N3E) process will be mass produced in the second half of 2023. There will be 3nm extended processes later, with a total of 5 processes including N3B, N3E, N3P, N3S and N3X.
The person who broke the news @手机 Chipmaster said that Apple’s A17Pro chip uses TSMC’s 3nmN3E process, which is relatively expensive, so the suffix name uses the word “Pro” for the first time. The standard version of the Apple iPhone 16 to be launched in 2024 is expected to be equipped with the new Apple A17 chip and will be manufactured using the lower-cost N3B process.
Insufficient demand for 3nm terminals may lead to a sharp decline in orders for ASMLE UV lithography equipment
Although 3nm is an advanced process that major manufacturers are competing for, there are differences in the reflections on the terminals, and demand will be affected by market fluctuations. TSMC's 3nm mass production capabilities and yields will improve next year, but mobile SoCs face stagnant upgrades and what some call "overperformance," weakening their role as a selling point for mobile devices such as mobile phones.
Tianfeng Securities analyst Ming-Chi Kuo pointed out in a survey report that weak demand for Apple hardware products by 2024 is expected to trigger a chain reaction and affect chip manufacturers. It is expected that the number of orders for ASMLE UV lithography machine equipment will be significantly reduced by 30% next year.
Ming-Chi Kuo said that ASML may significantly reduce EUV lithography machine shipments by 20% to 30% in 2024 because the demand for 3nm chips from Apple and Qualcomm is lower than expected. Currently, MacBook and iPad shipments will decline significantly by approximately 30% and 22% respectively in 2023, to 17 million and 48 million units. The reason for the significant decline is the end of home office and the gradual decline in the appeal of new products Apple Silicon and Mini-LED to consumers. Looking forward to 2024, the lack of growth momentum in MacBook and iPad is not conducive to the demand for 3nm chips.
Ming-Chi Kuo also expressed his views on Qualcomm. He believes that Qualcomm’s 3nm demand in 2024 will be lower than expected because Huawei will stop purchasing Qualcomm chips. In addition, Samsung will also develop its own Exynos2400 SoC for its own mobile phone applications. Demand for Samsung's 3nm GAA and Intel's Intel20A nodes (approximately equivalent to TSMC's 3nm) is lower than expected; Samsung, Micron and SK Hynix will not have memory chip expansion plans until 2025 to 2027 at the earliest.
However, the current market consensus is that the semiconductor industry will bottom out in the second half of 2023, but it needs to be closely observed whether the bottom time will be postponed to the first half of 2024 or the second half of the year.