TSMC 7nm capacity utilization drops 50% as AMD and others shift to 5nm

TSMC has been busy making 7nm wafers for a bunch of different companies over the years, and while you might not know it, you're probably using at least one product in your house that uses a chip based on the 7nm process node at TSMC.

AMD is building the semi-custom SoCs inside of the Sony PlayStation 5 and Microsoft Xbox Series X/S consoles, as well as its range of Zen CPUs (up until its latest Zen 4 CPU which switched over to TSMC's new 5nm process node) and its Radeon RX 5000 and Radeon RX 6000 series GPUs (while its new Radeon RX 7000 series are also based on TSMC's new 5nm process node).

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Intel has been tapping TSMC's 7nm process node for a while now, Qualcomm as well, and also MediaTek... oh and we can't forget Apple. You can see TSMC has been busy with making 7nm chips for everyone, but with hundreds of millions of 7nm-based products shipped... the 7nm party is winding down and coming to an end.

• Read more: TSMC has shipped over 1 billion chips manufactured on 7nm node

Digitimes is now reporting that TSMC (Taiwan Semiconductor Manufacturing Company) and its 7nm family capacity utilization rate have dropped below 50% and will continue to decline as we speed into Q1 2023. TSMC's current Kaohsiung 7nm capacity expansion has been suspended, with TSMC not commenting on the matter.

Industry insiders have said that the 7nm capacity utilization rate of the Taichung Fab 15B factory is actually lower than expected, dipping below 50%, and will continue to slide into the first quarter of 2023. The 7nm side of the Fab 22 plant will be "shelved indefinitely" and the construction of its new plants, says Digitimes' sources.

Deeper issues are also at play here -- putting aside possible war with China licking its lips at wanting to attack and take over Taiwan, but companies are cutting orders for their products, or delaying shipments. Most of the customers that are currently using 7nm are shifting to the newer 5nm and 4nm process nodes.

• Read more: TSMC rumored to make Intel 5nm CPUs in 2021, high-end 3nm CPUs in 2022
• Read more: Android flagship smartphones in 2023: Snapdragon 8 Gen2 made by TSMC
• Read more: Taiwan says TSMC's engineers in the US are 'babies' for leaving Taiwan
• Read more: Apple iPhone 15 Pro 'to be the most powerful 2023 phone' with 3nm chip

Now, let's talk about the companies that are the most affected by TSMC's slowing down of pumping out 7nm chips. Qualcomm and MediaTek both have been leaning on TSMC and its 7nm process node for mobile SoCs that go into hundreds of millions of smartphones per year, but even the big mobile guys are cutting orders at TSMC.

Intel is another big one -- and it shouldn't be surprising, either -- with the PC, server, and other areas of Intel's businesses slowing down quickly. Digitimes reports that this has forced Intel's hand and had Big Blue reducing its orders at TSMC, including 6nm chips for its does-it-even-exist Intel Arc A-series GPUs, as well as their 7nm orders for Intel's upcoming Xe-HPC architecture in the upcoming Ponte Vecchio.

NVIDIA isn't getting away from this either, as they're still making A100 Tensor Core GPUs using TSMC's 7nm process node while making their H100 Tensor Core GPUs on TSMC's new 4nm process node. Digitimes' sources add that the "largest number of RTX 40 series orders have also been fully revised or delayed".