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More 5nm chips are coming to power your future devices

The second half of 2022 will see the arrival of several next-gen products, namely Nvidia and AMD GPUs, while the latter company also has its Zen 4 Ryzen 7000 processors in the pipeline. In order to cope with the increased demand for its silicon, semiconductor giant TSMC is said to be expanding its production capacity by a considerable amount.

As initially reported by Tom’s Hardware and DigiTimes, the amount of N5 nodes being produced is being increased by 25% during 2022.

A technician placing a CPU into a motherboard socket for a PC.
Narumon Bowonkitwanchai/Getty Images

The company’s N5 silicon, which houses 5nm processes, produces the standard N5 node, a more powerful variant (N5P), as well as N4, N4P, and N4X.

Currently, TSMC has the required amount of machinery in place to create 120,000 N5 wafer starts per month (WSPM). That figure was already targeted as a goal for the first few months of 2022. In order to accommodate the demand from the likes of Nvidia, AMD, and Apple for its future products, the company will reportedly be equipping its factories with extra equipment.

As a result, the 120,000 N5 WSPM will be boosted to 150,000 WSPM, which is a target TSMC expects to hit by the third quarter of 2022.

Both Nvidia and AMD are believed to be utilizing the 5nm process node for its upcoming Ada RTX 40 GPU lineup and the RX 7000-series, respectively. In the case of Team Red, it’s expected that the company will also require the same silicon for its next-gen Zen 4 Ryzen processors.

It’s not just these two GPU companies that rely on TSMC’s chips. Its clientele also includes a highly valuable customer in the form of Apple. As highlighted by Tom’s Hardware, Apple is said to apply the N5 and N5P nodes for its A14, M1, and A15 system-on-chips, while the iPhone and Mac creator’s next-gen A16 chip is expected to switch over to N4.

To illustrate how valuable TSMC’s 5nm process node is to the technology industry, Nvidia is reportedly paying $10 billion to the company for its order of 5nm silicon.

So why is everyone paying such astronomical amounts to acquire its share of TSMC’s 5nm process capacity? What’s so special about it? As Hardware Times explains, the 5nm node is “16% faster than the 7nm node at the same power or 14% more efficient at the same performance.” For reference, the 7nm process will be succeeded by the 5nm node, with 2022 being the year where technology companies transition to the upgraded silicon.

TSMC, meanwhile, is spending $100 billion over the coming years in order to “support the manufacturing and R&D of advanced semiconductor technologies.” That figure includes $44 billion in 2022, which was preceded by a $30.4 billion expenses bill during 2021. In terms of revenue, it expects total sales for 2022 to be 25% higher than 2021’s earnings of $57 billion.

Naturally, TSMC can fund its expenditures and expansion thanks to its large orders. However, it can also secure financing as it’s the most valuable semiconductor company in the world. Thanks to a value of $618.8 billion, it’s currently the eighth largest firm based on market cap.

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