Four Chinese companies are secretly increasing their advanced process orders with TSMC

Reports have revealed today that four Chinese mainland companies, Xiaomi, OPPO, Bitmain, and AI processor start-up Horizon Robot are all considering forming close cooperation with TSMC to accommodate their expanding demand, particularly for processes below 5nm.

According to Digitimes, the Chinese four mainland are capable of creating sophisticated chips on their own but want to work closely with TSMC on a low-key basis. TSMC intends to transition to mass production of the 3nm processor in the second half of 2022 and will continue to produce as planned.

Huawei HiSilicon was one of TSMC’s biggest clients who used advanced node manufacturing technologies. Sanctions imposed by the United States on Huawei have prevented HiSilicon from accessing cutting-edge chip technology. Other mainland Chinese clients, meantime, are putting orders for TSMC’s 28nm, 7nm, 6nm, and 4nm processes at a faster rate, progressively filling the HiSilicon orders that have been lost.

In addition to long-term partners like Goodix Technology and OmniVision, the source said that TSMC had signed contracts with UNISOC to build 6nm and 12nm mobile chips and orders for 5nm and 7nm chips for ZTE’s 5G base stations.

Bitmain, a startup that designs encrypted mining ASICs, is already a TSMC 7nm and 5nm process manufacturing customer. The MariSilicon X imaging NPU from OPPO is made on TSMC’s 6nm technology, with a total chip order of over 10 million units. Another possible mainland Chinese customer who has urged TSMC to employ an advanced process is Xiaomi, which is likewise interested in developing its own chips.

Horizon Robotics, which makes artificial intelligence processors for smart cars, is collaborating with TSMC to deliver automotive-grade solutions in 16nm and 28nm, according to the source. According to the two companies, Horizon Robotics’ Journey 6 series semiconductors will be manufactured using TSMC’s 7nm process technology in 2023.

Cambrian and Alibaba’s semiconductor subsidiary Pingtouge are rumored to be mainland Chinese AI firms collaborating with TSMC. Pingtou has placed orders with TSMC for 5nm, 7nm, and 28nm chips, while Cambrian has signed a contract to supply 7nm solutions.

The proportion of mainland China customer order revenue to total wafer revenue increased to 11% in the first quarter of 2022, up from 6% in 2021. When HiSilicon was still one of TSMC’s primary clients in 2020, the percentage was 22%.

According to the sources, TSMC forecasts mainland China revenue to be close to 2020 in 2022, with revenue continuing to climb to more than NT$250 billion ($8.5 billion) in 2023.

Consequently, it stated that growing TSMC’s customer portfolio in mainland China is a surefire strategy for the company to maintain its market dominance in the foundry sector. Receiving large sub-5nm chip orders from mainland China will also help the company increase its advanced process customer base.