A recent story from EE Times appears to confirm online rumors that Apple supplier TSMC is having trouble keeping up with demand for its most recent 3 nm A17 Bionic CPUs. Due to growing production costs and a gradual increase in yields, the chips, intended for the iPhone 15 and iPhone 15 Pro, face a tough battle to fulfil demand and desired specifications before a launch that is anticipated for September.
Apple's new M3 chip, which TSMC will also manufacture, is likely to be affected by its supplier's problems. This might lead to similar performance problems or a price increase for M3 products to cover the higher manufacturing costs.
One of only two producers able to produce 3 nm spec chips at the moment is Taiwan Semiconductor Manufacturing Co. (TSMC), the other being Samsung. Because there are so few manufacturers available, TSMC is reportedly under pressure from higher-than-anticipated demand and "tool and yield" problems that are delaying the ramp-up of production.
According to a senior analyst at ARTE Research, the 3 nm yields for the A17 and M3 CPUs at TSMC are "at around 55%." Consequently, just about 50% of all 3 nm chips produced are subpar or flawed. While this may sound unpleasant, it's really rather common; as production processes become more effective over time, yields grow.
However, that process has been delayed by TSMC's need to postpone the launch and ramp-up of its 3 nm node because of the expensive equipment needed to improve production. However, he also acknowledged that "customers' demand for N3 [TSMC's terminology for 3 nm] exceeds our ability to supply." TSMC CEO C.C. Wei anticipates that 3 nm will reach full utilization in 2023.
The increase in manufacturing prices and lead times may have a significant impact on the availability of Apple's most recent chips, and it may be the reason the M3 "probably" won't be unveiled at this year's WWDC in June.
Contrarily, TSMC reportedly started sampling Apple's 5 nm A14 Bionic CPUs in October 2019, and by December of the same year, it had announced an average yield of over 80%. This gave the manufacturer plenty of time before the debut of the iPad Air and iPhone 12 products, which would go on sale in 2020.
The fact that TSMC's Fin FET transistors are approaching their capacity limits and making the 3 nm (and future 2 nm) a more time- and money-consuming endeavor may be contributing to the poor utilization of its 3 nm output.
It's possible that Apple may pass on the higher production costs to customers, or that the M3 and A17 bionic processors could suffer significant performance losses as a result of the A17 chip's sluggish ramp-up in manufacturing and higher development costs.
It is commonly known that Apple's products are expensive; the average cost to produce the iPhone 14 Pro Max, for example, was $454, despite its $1,000+ suggested retail price. Although Apple has previously rejected a suggested price hike for the iPhone 15, there is no assurance that the company would do the same for its upcoming M3-based smartphones. Apple prefers to make sure that its costs are covered and then some.
We'll have to wait and see how Apple decides to handle this. However, TSMC had previously encountered such difficulties and was able to come up with a solution just in time. Can they repeat it? Only time will tell.
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