TSMC making cuts in key areas, including in the production of the 5nm chip

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The implications of the US-China trade war and the fight against China-owned company Huawei may be coming to directly impact Apple users. TSMC who recently announced a new plant in the United States and who will supply the 5nm chips for the iPhone 12 has been forced to suspend orders from Huawei on a legal basis.

While a major blow to Huawei’s supply chain, it was also a major loss to TSMC. Huawei contributed almost 14% of TSCM’s 2019 revenue, the company was on track to beat Apple as the supplier’s biggest customer prior to the ban.

With the loss of its 2nd customer, TSMC is expected to make cuts in some key areas, and according to a new report by CLSA Asia director, Xiaoxi Yang, it’s already happening:

According to CLSA Asia director, Xiaoxi Yang, TSMC customers have begun to cut orders. He also expects the company to reduce its 5nm processes production capacity. TSMC’s initial target for 5nm chips is 1.5 million wafers month. It will also reduce the 7 nm production capacity reduction. According to reports, the total reduction will cost the company $ 5-7 billion in capital expenditures between 2020 and 2021.

GizChina

Yang notes the supplier is thought to be cutting on 5nm chip production, the same chip being used in the iPhone 12 but provides no specifics of how much or the phases of the cut. He especially notes that TSMC customers have begun to cut orders, but does not mention if Apple is included.

The iPhone 12 is already facing a delay due to the impact that COVID19 has had on the world economy. Adding a cut in production from the device’s main supplier, for arguably its most important component is not ideal.

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Sami
Sami started falling in love with Apple in 2010 with the iPhone 4S. As a registered developer, he deeply admires the world of Apple. Sami is an aspiring journalist, writer, and actor. He also has devoted his life to sharing his passion and knowledge with others around the world.