TSMC's 12-Inch Wafer Soars 22.8% on 3nm Triumph

On January 24th, 2023, global semiconductor sales experienced an 11.1% YoY decline to $533 billion, as reported by Gartner. However, TSMC's latest financial report for Q4 2024 reveals a noteworthy 22.8% YoY increase in the average selling price of its 12-inch wafers, reaching $6,611.

This surge in TSMC's wafer prices is attributed to a substantial increase in revenue share from the N3 (3nm) process technology. Analysts, including Stacy Rasgon from Bernstein Research, highlight that the growth in the semiconductor industry is primarily driven by increased pricing rather than higher processor shipment volumes.

Despite a 20.1% YoY decrease in TSMC's 12-inch wafer shipment volume to 295.7 million pieces in Q4 2023, well below the 370.2 million in Q4 2022, TSMC's Q4 revenue only decreased by 1.5%, reaching $19.62 billion.

The key factor behind this discrepancy is the rise in product unit prices. The financial report indicates that the average price of TSMC's 12-inch wafers in Q4 2023 was $6,611 per wafer, surpassing Q4 2022's $5,384. This increase is attributed to higher shipments of wafers using the higher-priced N3 node process to clients like Apple.

TSMC's revenue share from the 3nm process increased to 15% in Q4 2023, 5nm process revenue share stood at 35%, and 7nm revenue share was 17%. Overall, revenue share from processes, including 7nm and below advanced nodes, reached 67%.

In terms of revenue contribution, the N3 process brought in $2.943 billion, N5 process generated $6.867 billion, and N7 process contributed $3.3354 billion to TSMC. In summary, TSMC's advanced technology nodes (N7, N5, N3) account for 67% of its wafer total income. Moreover, a broader category, including all FinFET-based process technologies, constitutes 75% of the company's wafer sales.

Huang Renzhao, TSMC's CFO and spokesperson, stated, "TSMC's performance in Q4 2023 benefited from the continued strong growth of our leading 3nm technology." It is revealed that there is a sustained strong demand for the 3nm process from customers, and the revenue from 3nm is expected to double in 2024.

Previous analysis reports suggest that wafers produced using TSMC's N3 node process are priced as high as $20,000. While this figure may not be entirely accurate, given TSMC's pricing depends on factors like order volume, it is evident that TSMC's charges for the N3 node process are higher than those for N4/N5 or N6/N7 nodes. Thus, TSMC's upward adjustment in production prices for node processes has significantly contributed to the semiconductor industry's recent growth, despite a decline in chip shipments from 2019 to 2023, with a substantial increase in the average selling price (ASP).