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TSMC had an accident
https://www.hardocp.com/news/2019/01/28/tsmc_nanke_14_factory_production_interruption_could_affect_nvidia_others/
The original source articles are apparently in Chinese.
For those who aren't aware, TSMC is probably the world's largest foundry of logic chips. They're the actual manufacturer for all or nearly all of the chips that Nvidia sells, and much of what AMD does, too. They also manufacture a lot of cell phone chips, as well as many important things that aren't for consumer use.
Apparently one of their fabs had used some improper materials, and thus ruined a ton of wafers. It's not clear exactly which chips are produced at which fabs, but this could mean, for example, half of the Turing GPUs that Nvidia wanted to bring to market in the next two months just went poof. Or all of them. Or 5% of them. Or a week or a month or some other period of time. And similarly for a lot of advanced cell phone chips. I think that the Xbox One X and PS4 Pro chips are manufactured at TSMC, too, so they could also be affected or not.
A similar situation played out in late 2009 when something went wrong at TSMC and wrecked a couple months worth of AMD's Cypress GPU chip (Radeon HD 5800 series) that was then the top of the line--and far superior to anything Nvidia had to offer at the time. Meanwhile, AMD's Juniper chip (Radeon HD 5700 series) was unaffected. So it's possible that this could have weird effects like eliminating all new GeForce RTX 2080s for a couple of months while leaving the other Turing cards unaffected.
This won't be a direct financial loss for Nvidia, MediaTek, Huawei, or other affected companies, as TSMC won't charge them for the ruined wafers. But it could be an indirect loss, as they won't be able to sell products that they expected to sell.
In a possibly related story, Nvidia reduced their guidance on fourth-quarter earnings by half a billion dollars.
https://techreport.com/news/34432/nvidia-drops-half-a-billion-from-q4-guidance
That said, this isn't guaranteed to turn out badly for the companies affected, at least other than TSMC, who will surely be out tens or hundreds of millions of dollars directly, as well as a hit to their reputation. Remember how some flooding in Thailand caused hard drive shortages some years back, which led to enormous price spikes on the hard drives that were available, and record profits for Seagate and Western Digital?
The original source articles are apparently in Chinese.
For those who aren't aware, TSMC is probably the world's largest foundry of logic chips. They're the actual manufacturer for all or nearly all of the chips that Nvidia sells, and much of what AMD does, too. They also manufacture a lot of cell phone chips, as well as many important things that aren't for consumer use.
Apparently one of their fabs had used some improper materials, and thus ruined a ton of wafers. It's not clear exactly which chips are produced at which fabs, but this could mean, for example, half of the Turing GPUs that Nvidia wanted to bring to market in the next two months just went poof. Or all of them. Or 5% of them. Or a week or a month or some other period of time. And similarly for a lot of advanced cell phone chips. I think that the Xbox One X and PS4 Pro chips are manufactured at TSMC, too, so they could also be affected or not.
A similar situation played out in late 2009 when something went wrong at TSMC and wrecked a couple months worth of AMD's Cypress GPU chip (Radeon HD 5800 series) that was then the top of the line--and far superior to anything Nvidia had to offer at the time. Meanwhile, AMD's Juniper chip (Radeon HD 5700 series) was unaffected. So it's possible that this could have weird effects like eliminating all new GeForce RTX 2080s for a couple of months while leaving the other Turing cards unaffected.
This won't be a direct financial loss for Nvidia, MediaTek, Huawei, or other affected companies, as TSMC won't charge them for the ruined wafers. But it could be an indirect loss, as they won't be able to sell products that they expected to sell.
In a possibly related story, Nvidia reduced their guidance on fourth-quarter earnings by half a billion dollars.
https://techreport.com/news/34432/nvidia-drops-half-a-billion-from-q4-guidance
That said, this isn't guaranteed to turn out badly for the companies affected, at least other than TSMC, who will surely be out tens or hundreds of millions of dollars directly, as well as a hit to their reputation. Remember how some flooding in Thailand caused hard drive shortages some years back, which led to enormous price spikes on the hard drives that were available, and record profits for Seagate and Western Digital?
Comments
Apparently the TSMC fab with the problems was on 16/12 nm, which includes Pascal, Volta, and Turing GPUs, though it's not clear if any of those GPUs were produced at that particular fab. The newer 7 nm is unaffected.
As for Huawei, China has been stealing technology and IP from foreign companies and cranking out counterfeit products for decades. It's possible that the indictments coming now is simply because now we have an administration inclined to blast China, while previous ones were more hesitant to upset them. It's also possible that it's merely because there are now bigger fish to target than small-time counterfeiters.
Whether TSMC end up paying Nvidia anything may hinge on the state of the current orders / contracts between the two.
NVidia may have had negotiated a slow down in production if sales have been slow. The reported switch to Samsung's 7nm fab - if reports at the start of the year are accurate - may also factor into things.
https://www.anandtech.com/show/13975/tsmcs-fab-14b-photoresist-material-incident-550-million-in-lost-revenue
That doesn't mean that $550 million in completed products just went poof. Nvidia might pay TSMC a pro-rated $50 to make a GPU chip that they end up selling in a completed video card for hundreds of dollars.
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And it's not like TSMC is the only tech company in the world that deals with sensitive IP. For starters, Asus, Gigabyte, MSI, and AsRock are all based there, so whatever motherboard you've got in your computer was probably made by a Taiwanese company. There are a lot of others, too. They have no problem with respecting IP.
Sometimes the US patent system does go too far; in particular, "software patents" should not exist at all. But copyright is absolutely essential. Otherwise, you put all the work into developing something, someone else steals it and sells it, and then it's impossible for you to make back the money it cost to develop it.
"Be water my friend" - Bruce Lee