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TSMC has received $4 billion from clients to reserve future manufacturing capacity


The big picture: TSMC, the world’s largest foundry, said in its most recent financial report that it accepted an unprecedented amount in advance payments for its future manufacturing capacity this year. Hopefully, that money will accelerate the construction of new equipment to build processors. As the public-facing computer manufacturers continue to fail to deliver hardware into the hands of consumers, the attention has turned towards the foundries for long-term solutions to the chip shortage.

In the past, the main way TSMC has allowed customers to reserve capacity was through “guarantee deposits,” a one-time payment from that was refunded when the customer finalized their order.

TSMC is continuing to accept guarantee deposits; in fact, about two-thirds of the NT$642 (US$23) million of guarantee deposits that it’s holding were paid in the past nine months. But this year, the company shifted its focus onto “temporary receipts” for future capacity, which are effectively pre-payments.

TSMC signed deals for NT$106 (US$3.8) billion in temporary receipts this year.

Credit: Fritzchens Fritz

The money isn’t TSMC’s to keep until it’s met the “terms and conditions set forth in the agreements” with its customers, and hence there are rules about how it can be spent. But the idea is that TSMC will use it to create more manufacturing capacity for customers to buy.

TSMC’s report doesn’t disclose the details of the agreements nor does it say who the customers are. At a guess, the largest is probably Apple, which taps TSMC for all its iPhone and Mac SoCs. AMD could be close behind. Last month, AMD said that it had prepaid US$355 million to various foundries this year. Qualcomm is probably up there, too.

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Neither Intel nor Nvidia rely heavily on TSMC at the moment, but both have reportedly been discussing the manufacture of their next-gen GPUs with the foundry. At some point in the future, TSMC might be the sole supplier of GPU chips.





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