tsmc TSMC offering "super hot runs" for companies affected by looming trade sanctions

[BachChain]

Summary

 

US trade sanctions against selling AI chips to Chinese customers are set to go into full effect in March of 2023. This has left manufacturers of these chips, such as Nvidia, scrambling to sell as many of these high-margin products as they can in China before that deadline. To help accommodate them, TSMC has started offering batches of "super hot" runs, where they claim turnover time has been cut from an average of six months to around three.

 

Quotes

Quote

Nvidia is naturally keen to fulfill orders for its high-end, high-margin GPU accelerators. Key customers in China won’t be reachable by the green team in the near future, as the US has imposed sanctions on high-end AI chips. However, to give US tech firms time to adjust, the US government will allow for a grace or transition period

Quote

The UDN report says that TSMC has a special program to help out time-pressured customers with a ‘super hot run.’ With this rush order between TSMC and its customer negotiated (it clearly won’t be cheap) the order to delivery time can be basically cut in half. That means Nvidia’s order for a new batch of A100 and/or H100 GPUs can be delivered in two to three months, rather than in five to six months, according to the source

 

My thoughts

I wonder if this would require TSMC to delay other orders, like AMD's next-gen products

 

Sources

https://www.tomshardware.com/news/nvidia-tsmc-rush-orders-before-china-sanctions

[porina]

Wasn't it only a month or so ago we were seeing reports of both AMD and nvidia (trying to) reduce their allocation at TSMC? It might be different process nodes so they're not the same thing, but I found it amusing.

 

To my understanding just getting from start to finish of the fab process is a month or two depending on complexity. That's just the manufacturing side, not admin.

[Dracarris]

What a shit show this all has become, it's just sad.

[Fasterthannothing]

They should have turned off china's access a heck of a long time ago. China shouldn't be getting a single computer component from any country who sells the same parts to the United States. 

[Brooksie359]

13 minutes ago, Fasterthannothing said:

They should have turned off china's access a heck of a long time ago. China shouldn't be getting a single computer component from any country who sells the same parts to the United States. 

But why? I mean as much as people hate China I don't think it's appropriate to force companies to discontinue doing business with them. I mean if one day China had more power than the US I would hope they wouldn't do something similar. It seems a but petty to me but I guess maybe I am missing something. 

[cj09beira]

3 hours ago, porina said:

Wasn't it only a month or so ago we were seeing reports of both AMD and nvidia (trying to) reduce their allocation at TSMC? It might be different process nodes so they're not the same thing, but I found it amusing.

 

To my understanding just getting from start to finish of the fab process is a month or two depending on complexity. That's just the manufacturing side, not admin.

only saw nvidia reports of lowering allocation

[porina]

3 minutes ago, cj09beira said:

only saw nvidia reports of lowering allocation

 

A quick search gives:

Quote

AMD reduced orders for products made on TSMC's N6 and N7 process technologies by 20,000 wafers for Q4 2022 and Q1 2023. Since AMD is about to release its next-generation desktop CPUs (Ryzen 7000-series 'Raphael') and GPUs (Radeon RX 7000-series based on the RDNA 3 architecture) using TSMC's N5 node, it's logical for the company to reduce orders for chips made on previous-generation fabrication technology.

https://www.tomshardware.com/news/amd-apple-nvidia-reportedly-reducing-5nm-tsmc-orders

 

I'm not motivated enough to find the details but I'm sure there was more detail on AMD than the above goes into.

[cj09beira]

12 minutes ago, porina said:

 

A quick search gives:

https://www.tomshardware.com/news/amd-apple-nvidia-reportedly-reducing-5nm-tsmc-orders

 

I'm not motivated enough to find the details but I'm sure there was more detail on AMD than the above goes into.

so just for 7nm/ 6, totally normal end of life changes as you said not the same at all.

[porina]

2 minutes ago, cj09beira said:

so just for 7nm/ 6, totally normal end of life changes as you said not the same at all.

Still, they over-estimated the demand requiring that adjustment.

 

Doesn't matter how big companies are, no one really knows the future and can only make the best guess.

[cj09beira]

9 minutes ago, porina said:

Still, they over-estimated the demand requiring that adjustment.

 

Doesn't matter how big companies are, no one really knows the future and can only make the best guess.

did they? most of their products on 7nm are near or at EOL so i wouldn't call a reduction in wafers a overestimation of demand unless i knew they were planning to cut it less which we dont know.

and every article i see around this issue shares my sentiment of it not being a reactionary event but a planned one.

Just to be clear i still agree that no one can predict everything.

 

from extremetech.com

Quote

The report comes from Digitimes, and has been translated by a bilingual Twitter account named RetiredEngineer. It states that TSMC’s three biggest customers are backpedaling on future orders for wafer capacity. Apple has already begun production of the iPhone 14, but has already cut its “first wave” order of 90 million phones by 10 percent. AMD reduced its order for 7/6nm by 20,000 wafers for the fourth quarter as well. However, it states order volume for 5nm wafers for PCs and servers is unchanged. That is assumedly its Zen 4, Epyc/Threadripper, and RDNA3 products.

TSMC 12-inch foundry. Photo by TSMC.

Nvidia is apparently in a much tougher spot though, and is getting pushback from TSMC. The company famously switched from Samsung’s 8nm process to TSMC’s 5nm node for its RTX 40-series. In doing so, it allegedly made a massive down payment on 5nm and below wafer capacity. This was all done mid-pandemic, so it was a smart move at the time. Now that crypto mining has crashed though, there’s a deluge of 30-series GPUs on the market. The article calls it “enormous channel inventory.” This has caused Nvidia’s partners to reduce their orders, so Nvidia is asking for some slack from TSMC. However, TSMC is reportedly unwilling to reduce its order.

All it’s offering Nvidia is to push the first shipment of GPUs back one quarter. Or, if it really needs it, it can be pushed to Q1 of 2023. However, if Nvidia takes this offer it will be responsible for finding a replacement for the now-idle fab capacity. That is likely going to be a very tough ask. Not only because of the current market conditions, but what they’re projected to be at the end of the year. It’s the whole reason why these companies are asking to reduce their orders in the first place. Also, those quarterly numbers aligns with the rumors Nvidia would be unveiled the RTX 40-series in September. Pushing it back on quarter would put it in Q4, and then one more is Q1. We certainly hope that doesn’t happen, but it seems likely.

 

[porina]

11 minutes ago, cj09beira said:

did they? most of their products on 7nm are near or at EOL so i wouldn't call a reduction in wafers a overestimation of demand unless i knew they were planning to cut it less which we dont know.

and every article i see around this issue shares my sentiment of it not being a reactionary event but a planned one.

I skimmed the start of the old thread, and can't find what I thought I saw. Maybe I mis-remembered or mis-interpreted the scenario. 

[Ydfhlx]

4 hours ago, Brooksie359 said:

But why? I mean as much as people hate China I don't think it's appropriate to force companies to discontinue doing business with them. I mean if one day China had more power than the US I would hope they wouldn't do something similar. It seems a but petty to me but I guess maybe I am missing something. 

They already have a lot of power in this regard. Just look around your house and see what has been manufactured in China.

[tim0901]

3 hours ago, cj09beira said:

did they? most of their products on 7nm are near or at EOL so i wouldn't call a reduction in wafers a overestimation of demand unless i knew they were planning to cut it less which we dont know.

Except for the consoles. Which are very much not EOL.

[Kisai]

7 hours ago, Brooksie359 said:

But why? I mean as much as people hate China I don't think it's appropriate to force companies to discontinue doing business with them. I mean if one day China had more power than the US I would hope they wouldn't do something similar. It seems a but petty to me but I guess maybe I am missing something. 

I don't think people hate 'China', they just really dislike how China-made goods have kind of "ruined" manufacturing of cheap goods by both lowering the quality and eliminating jobs, only to expensively pay for those goods to be shipped, in which only the logistics companies profit.   The Pandemic was an excellent test-case for showing how fragile the entire global logistics system is as a whole.

 

The line only goes down, when you run out of cheap labor, either the jobs come back, or they get replaced with robots.

 

Also, don't expect nvidia to be making low-end parts for a while, they likely front-loaded their costs for the most expensive dies so they could make as many sales as possible under the deadline.

[Arika]

Why is China so shit-scared of AI?

[AnonymousGuy]

3 months is about what the current wafer cycle time is with all the quad patterning 20 metal layer whatever the fuck shit.

 

So you're basically paying an assload to jump ahead of everyone else in the order queue.

[Jito463]

10 hours ago, Fasterthannothing said:

They should have turned off china's access a heck of a long time ago. China shouldn't be getting a single computer component from any country who sells the same parts to the United States. 

First we have to get the bulk of manufacturing out of China.  That's the real battle.

10 hours ago, Brooksie359 said:

But why? I mean as much as people hate China I don't think it's appropriate to force companies to discontinue doing business with them. I mean if one day China had more power than the US I would hope they wouldn't do something similar. It seems a but petty to me but I guess maybe I am missing something. 

The issue isn't China in general, it's the CCP specifically.  And we all better hope they don't continue gaining power like they have been.

[Brooksie359]

43 minutes ago, Jito463 said:

First we have to get the bulk of manufacturing out of China.  That's the real battle.

The issue isn't China in general, it's the CCP specifically.  And we all better hope they don't continue gaining power like they have been.

Yep because having Nvidia take a huge hit in profit due to losing a huge segment of the market that is China and further incentivising the creation and use of Chinese based AI chips is somehow going to hit China hard. 

[StDragon]

4 hours ago, Kisai said:

...only to expensively pay for those goods to be shipped, in which only the logistics companies profit.   The Pandemic was an excellent test-case for showing how fragile the entire global logistics system is as a whole.

JIT = Just In Time (delivery).

 

Because it's more expensive to warehouse items than to move them with velocity. That's why logistics has been a thing because there's less operational overhead costs while remaining agile to unforeseen market forces.

 

But it doesn't help when China goes into "lockdown mode" when a single person coughs thereby shutting down ENTIRE CITIES for weeks!!!! This cause shipping and port bottlenecks which is where the real issue is. And in America at least, truckers get screwed. They burn out and so you have to raise prices to pay for new recruits willing to carry on this occupation.

[StDragon]

4 hours ago, Arika S said:

Why is China so shit-scared of AI?

Because automation is inherently both a deflationary and a disruptive market force. And at the moment, China's economy (and world at large in fact) is in a fragile state. With the real-estate bubble popping over there, it won't take much to push it over the edge towards stagflation much like Japan felt in the 90s. AKA "The Lost Decade"