The staggering amount of money in the Cupertino company’s bank accounts mean that it’s first in line to take up the limited capacity on offer from TSMC, leaving other fabless companies, such as Qualcomm, AMD and Nvidia fighting over what’s left. AMD in particular, despite its apparent success, simply doesn’t have the really big dollars to fight these larger companies in order to guarantee a good enough chip supply. Even in the last day or so, news comes that AMD is raising its GPU prices due to a rise in TSMC’s costs.
As the global semiconductor shortage worsens, prominent fabless companies—those without the same level of silicon manufacturing expertise as Intel—are vying for restricted wafer capacity in order to keep selling products in large quantities. Apple is by far the largest of these businesses.
The way things are now, most current generation PC products (and consoles too) sell out as soon as they come into stock. Woeful graphics card prices are a meme at this point, DDR5 memory is being scalped at ridiculous prices and even motherboards continue to creep upwards in price thanks to component shortages. And that’s just on the supply side. The pandemic means more people work from home. They need PC’s and laptops because their tablets and phones don’t have the grunt to deal with most workflows and multitasking. And with lockdowns and more time at home, we have more time to play games. This means we have a supply and demand double whammy.
AMD’s Zen 4 processors are rumored to be built on TSMCs 5nm node. It’s been reported that next generation Nvidia GPUs will also be built by TSMC, and not Samsung. So with Apple hogging a lot of TSMC’s advanced node production capacity, and Nvidia joining the fight over what’s left, AMD could find itself being squeezed out by its more cash flush competitors.
Companies know they have a rare opportunity to capitalise and make huge profits, but in order to do that, they need reliable component suppliers too. Taiwan based TSMC, the major supplier of many of the CPUs, GPUs and components that are critical to the running of our PCs, isn’t the only chip maker, even it it is the most technologically advanced one at this point in time.
That brings us to Zen 5. It’s a given that AMD would never partner with Intel. Global Foundries (AMD’s former fab division) and UMC aren’t trying to compete with TSMC on the bleeding edge nodes, but Samsung is, and it may be that AMD is uniquely positioned to partner with the Korean giant to manufacture its future products. If such a move happens, we’re unlikely to see the fruits of the partnership for a few years. These decisions are made years in advance as the design of a CPU and the node it is manufactured on are very much tied together. You can be sure that Zen 5 development is well underway, so if such a move were to happen, the documents have probably already been signed.
We can’t ignore the current geopolitical tensions. The China and Taiwan issue isn’t going to go away anytime soon, and it’s certain that a global leader in manufacturing like TSMC is a pawn on the minds of Chinese and Taiwanese leaders. Relying on one manufacturer can be catastrophic if there is a supply side shock. However, if the political situation deteriorates further, the loss of TSMC output would make the current semiconductor shortage look like the effect a couple of burnt muffins has on a Sunday cake stall.
Should AMD partner with Samsung, they’ll be neighbours. Samsung has announced the construction of a new $17B plant in Taylor, Texas which is just a few kilometers up the road from Austin, Texas. Guess who else has a significant corporate presence in Austin? You guessed it. AMD.
Though such a geographical link may prove entirely coincidental, a USA based cutting edge mega foundry won’t have to go far to find customers. Smart money wouldn’t bet against AMD being one of them.