Needham Reasons How TSMC's N3E May Become Industry's Most Favored FinFET Node

Needham analysts shared the key takeaways from Taiwan Semiconductor Manufacturing Company Ltd's TSM 2022 Technology Symposium.

Firstly, N3 FinFLEX extends design optionality to transistor-level but may also signal the growing challenge of Moore's Law as TSMC pushes FinFET technology to a 3nm node.

Secondly, N2 will be further challenged to cover TSMC's entire application space as the trade-off between performance and power may further widen. But the growing incompatibility between foundry gate-all-around (GAA) processes may lead to a "winner-takes-the-most" outcome in the GAA era.

Thirdly, TSMC is fully committed to greater use of hybrid bonding across its application space, as the company vows to expand SoIC capacity by 20 times through 2026. But the new introduction of InFO-3D suggests a potentially delayed adoption of hybrid bonding in mobile applications.

TSMC's N3E FinFLEX announcement suggests that the company is stretching the limit of FinFET technology. It also suggests that the company is aggressively pushing for greater adoption of its N3E process in HPC. 

As Samsung Electronics Co, Ltd SSNLF moves 3nm to GAA architecture, and Intel Corp INTC is busy with fixing its manufacturing at Intel 4 and Intel 3 nodes, despite the delay, TSMC's N3E may become the industry's most favored FinFET node due to its geometry advantage and the unprecedented design flexibility, if TSMC executes on FinFLEX with its EDA partners.

TSMC's N2 nanosheet announcement suggests that TSMC may continue to make mobile the lead adopter of its new processes. 

Intel's strategy to go with 4-stack RibbonFET at the 20A node suggests that Intel is prioritizing HPC and is not going after mobile, TSMC's cream-and-butter business, any time soon. 

It appears that TSMC is again electing to take small incremental steps by tackling one challenge at a time, and Intel is setting stretch goals again. 

Needham reiterated a Buy on TSMC.

Price Action: TSM shares traded higher by 1.19% at $81.60 on the last check Friday.

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