Another one of Apple's (AAPL 0.12%) perennially popular iPhone release events is in the history books. The iPhone 15 family has been announced, and it will be the first computing device available using 3 nanometer (3nm) chipmaking technology (a designation that used to refer to the tiny transistor size on processors, but these days is more marketing than anything else). Taiwan Semiconductor Manufacturing (TSM +5.28%) has been busy since late 2022 cranking out these new high-powered chips for Apple's flagship product.
But seemingly missing from any processor upgrades, at least up until this point, are the MacBooks -- which are now fully powered by similar Apple Silicon M-series processors, like the iPhones. It looks like MacBooks may have to wait until 2024 for the latest and greatest advances in manufacturing. Is this signaling trouble for Taiwan Semiconductor Manufacturing (TSM)?
NYSE: TSM
Key Data Points
Chip manufacturing is a battleground
TSM is far and away the biggest third-party semiconductor foundry. It partners with virtually everyone else in the chip universe to handle some part of the complex manufacturing supply chain, and commands a majority of global market share when excluding memory chips from the equation. Samsung's third-party foundry is in a distant second place, with Intel gunning to take that No. 2 spot.
In fact, Intel has been shuffling around its operations, investing gobs of cash, and scoring government aid along the way to invest in its third-party foundry -- dubbed Intel Foundry Services (IFS). Though Intel currently has a massive manufacturing base it primarily uses to make its own in-house designed chips, it wants to open up this capacity to the world to offer supply chain diversification from TSM.
Intel CEO Pat Gelsinger has been adamant that the company is on track to reclaim tech manufacturing leadership by 2024. Intel says its 20A manufacturing node chips will be ready for 2024, and its 18A manufacturing node will reach production by the second half of 2024. The "A" stands for Angstrom, of which there are 10 in a nanometer, meaning Intel will beat TSM to 2nm chip manufacturing. TSM calls this N2, and it's scheduled to reach production by 2025 or 2026.
Of note, final specifics on these future chip manufacturing processes have not been fully revealed, and these size names are largely marketing terms. Nevertheless, Intel's 20A and 18A will be the first to utilize what's called Gate All Around (GAA) field-effect transistor (FET) technology -- or GAAFET -- the successor to the current leading manufacturing tech FinFET (fin-shaped field-effect transistor).
What could this have to do with Apple?
The iPhone-TSM chips aren't the same MacBook-TSM chips
The iPhone 15s are the first to use 3nm (or N3B, as TSM calls it) manufactured chips. But the MacBooks are still on the previous generation N5 (5nm) manufacturing process. Rumors have it that Apple is waiting for the next optimized manufacturing line, N3E, which is now entering full production for device launches in 2024. Other customers are also vying to get a piece of TSM's N3E manufacturing capacity.
Perhaps a MacBook with an N3 chip made by TSM -- an "M3" successor to the current second-gen M2 processor powering the current lineup of MacBooks -- will be announced next year. No word from Apple yet.
Or perhaps Apple is interested to see what kind of performance gains could be wrung from Intel's latest and greatest manufacturing, which will begin mass production next year, assuming no Intel setbacks. Could Intel be about to pull a coup?
TSM will be fine
To be clear, when filtering out the cheerleading from Intel management, IFS isn't gunning to overtake TSM's manufacturing empire in a single swoop. That would be impossible given TSM's epic size and how embedded it is into the global economy. Rather, Intel is simply looking to play some catch up.
And as I recently highlighted from some Broadcom commentary, chip designers that use TSM are likely to remain loyal given their long-standing relationship with the Taiwanese powerhouse. I'd venture to say Apple would prefer this too, rather than needing to do a full chip redesign just to utilize Intel's newest manufacturing prowess.
However, manufacturing supply chain diversification is a must. It will be interesting to see if Intel can optimize its new operations to land some secondary orders from some of these customers (like Apple, which would be a feather in IFS' cap) as they seek to bolster their own chip supply chains for their respective latest tech devices.
Long story short, when removing the marketing hubbub and management teams taking shots at each other, TSM is likely to be just fine, even if it falls roughly a year behind Intel's IFS top-of-the-line manufacturing processes. Intel has a lot to potentially gain, but it's not going to reconquer TSM that easily.
