Nvidia unhappy with TSMC wafer prices

[codedivine]

http://www.extremetech.com/computing/12 ... -worthless

You can kinda ignore the article, and focus just on Nvidia slides. Apparently, the price of TSMC 20nm and 14nm wafers is going to be much higher than 28nm prices. In effect, even if you die shrunk your current chip from 28nm to 20nm, it will cost the same to manufacture it. This is quite dire if true, both for AMD and Nvidia. Thoughts?

[Arclight]

http://www.extremetech.com/computing/123529-nvidia-deeply-unhappy-with-tsmc-claims-22nm-essentially-worthless

You can kinda ignore the article, and focus just on Nvidia slides. Apparently, the price of TSMC 20nm and 14nm wafers is going to be much higher than 28nm prices. In effect, even if you die shrunk your current chip from 28nm to 20nm, it will cost the same to manufacture it. This is quite dire if true, both for AMD and Nvidia. Thoughts?

I noticed the lack of price reuduction so the future does look grim. By the time we get to 14nm the very high end flagship will cost, what, $1000?

[flip-mode]

http://www.extremetech.com/computing/123529-nvidia-deeply-unhappy-with-tsmc-claims-22nm-essentially-worthless

You can kinda ignore the article, and focus just on Nvidia slides. Apparently, the price of TSMC 20nm and 14nm wafers is going to be much higher than 28nm prices. In effect, even if you die shrunk your current chip from 28nm to 20nm, it will cost the same to manufacture it. This is quite dire if true, both for AMD and Nvidia. Thoughts?

AMD and Nvidia aren't passing on any savings to the customer and now they're tasting their own medicine.

[TurtlePerson2]

A little bit of information is probably necessary to fully understand what's going on here. Unfortunately, I don't have all of that information since I am a VLSI design engineer and not a process engineer. What I can say for certain is that new processes are becoming much more expensive than the old ones.

For example, when Intel added High K Metal Gates (HKMG) to their process (Penryn) that required them to change some of their manufacturing process. Metal gates will melt during traditional thermal oxidation steps, so new techniques had to be developed. These new techniques are more time consuming and expensive to do. This increases the price of a wafer that uses this process relative to previous processes.

A lot of people don't understand the very serious obstacles involved in process shrinking these days. Things were easy for a couple of decades, but ever since we've started using process nodes with features smaller than the light used to draw them, things have become very difficult.

I wouldn't worry too much about nVidia or AMD passing on the price increase too much. Keep in mind that the actual cost for chips is fairly low, assuming decent yields. If that cost doubles, then nVidia's total cost to make these chips might increase by 20%. nVidia's largest expense is probably its payroll.

[TurtlePerson2]

AMD and Nvidia aren't passing on any savings to the customer and now they're tasting their own medicine.

I don't understand this sentiment. Why should companies pass savings to consumers? Companies should price their products as the market dictates. There's no reason that you deserve a cheap video card anymore than an employee deserves a bonus or a stockholder deserves a dividend. The few exceptions to this rule are already regulated by government (food prices, rent controls, etc.)

[Walkintarget]

AMD and Nvidia aren't passing on any savings to the customer and now they're tasting their own medicine.

I don't understand this sentiment. Why should companies pass savings to consumers? Companies should price their products as the market dictates. There's no reason that you deserve a cheap video card anymore than an employee deserves a bonus or a stockholder deserves a dividend. The few exceptions to this rule are already regulated by government (food prices, rent controls, etc.)

Well said. They are in business to make a tidy profit, so I see nothing wrong with selling a luxury, not a necessity, at some level of markup.

[gbcrush]

AMD and Nvidia aren't passing on any savings to the customer and now they're tasting their own medicine.

I too am going to take a little stab at this statement. From a personal and customer-centric point of view I like this. Nothing like the thought of a little karma to put a smile on my face.

That being said, from a more neutral point of view, this is a sort of "7 fat cows, 7 lean cows" scenario for GPU makers. If they're about to get hit with higher prices, tighter times and budgets, then they'd best take in their harvest while things are plentiful and good.

If that means making use of any additional headroom to lower costs and keep prices high (or raise prices), well then yes, this forecast only justifies (economically) taking advantage of the fat cows while they can. Granted, the cows (that would be us) never really like it when they provide a boon to the farmers, but no one writes parables and prophecies from pro-cow points of view anyways

[flip-mode]

AMD and Nvidia aren't passing on any savings to the customer and now they're tasting their own medicine.

I don't understand this sentiment. Why should companies pass savings to consumers? Companies should price their products as the market dictates. There's no reason that you deserve a cheap video card anymore than an employee deserves a bonus or a stockholder deserves a dividend. The few exceptions to this rule are already regulated by government (food prices, rent controls, etc.)

So, by the same logic, Nvidia and AMD don't deserve cheap chips. TSMC should keep the profit, and Nvidia and AMD get more complex chips for the same price.

[flip-mode]

AMD and Nvidia aren't passing on any savings to the customer and now they're tasting their own medicine.

I don't understand this sentiment. Why should companies pass savings to consumers? Companies should price their products as the market dictates. There's no reason that you deserve a cheap video card anymore than an employee deserves a bonus or a stockholder deserves a dividend. The few exceptions to this rule are already regulated by government (food prices, rent controls, etc.)

Well said. They are in business to make a tidy profit, so I see nothing wrong with selling a luxury, not a necessity, at some level of markup.

Again, same goes for TSMC. TSMC is under no obligation to make things cheaper for Nvidia, so why is Nvidia "mad"? Are people understanding my argument here? I'm just pointing out Nvidia is mad that TSMC is about to treat Nvidia the way Nvidia treats its customers....

[TurtlePerson2]

That being said, from a more neutral point of view, this is a sort of "7 fat cows, 7 lean cows" scenario for GPU makers.

Congratulations for posting the most obscure biblical reference I've ever seen on TR.

[JustAnEngineer]

It's not a zero-sum game. There are win-win scenarios where both parties in a transaction can benefit. It is not to NVidia's long-term advantage to make TSMC completely unprofitable.

In a free market, pricing is set at the intersection of the supply and demand curves. In the case of semiconductor fabricators the market isn't completely free. There are design rule differences that pose a hurdle to NVidia leaving TSMC and taking their designs to another fabricator (because they'd have to re-design some of the details of their chips to work on the competitor's fabrication process). There are also capacity and process capability advantages at TSMC that pose hurdles for competitors like UMC, SMI or Global Foundries to being able to supply NVidia's needs.

[codedivine]

I agree with TurtlePerson2 that it is partly unavoidable. With every process generation, R&D costs are going up substantially.

[cegras]

Turtle, a question: are they still using polymer resists? Are resists one of the major things holding back scaling down?

[SecretSquirrel]

Turtle, a question: are they still using polymer resists? Are resists one of the major things holding back scaling down?

Not as far as I know. Of all the issues about scaling I hear at work, resist is not one of them. Masks and the photo-lithography process are certainly an issue, but it's due to issues with the behavior of "light" and the sharpness of the exposed image. I also hear the normal "gate leakage" and other complaints related to the physics of such small features. That said, like Turtle, I don't have much exposure to the processes guys. I am mainly around the design engineers.

--SS

[anotherengineer]

It should be offset by quantity though?

I mean if you reduce a process from 28nm to 14nm (half the size), then theoretically, you could get four 14nm chips out of the same area of silicon as one 28nm chip.......in theory.

Say due to extra silicon defects, etc. your only able to get 2 chips instead of 4 chips, even if the costs of a wafer doubles, the cost of an individual chip should be about the same.

I am sure JAE will have something to add

[Ifalna]

Say due to extra silicon defects, etc. your only able to get 2 chips instead of 4 chips, even if the costs of a wafer doubles, the cost of an individual chip should be about the same.

Nvidia doesn't want it to be the same, that's part of why they are complaining. They want the new generation to be cheaper, so they can start making bigger DIEs and thus more powerful hardware up to the point where the DIE has the same relative size as it had before the shrink.

22nm and 14nm are insanely difficult from a design/manufacture PoV, I wouldn't really be surprised if current Yields are worse than your example.

[gbcrush]

That being said, from a more neutral point of view, this is a sort of "7 fat cows, 7 lean cows" scenario for GPU makers.

Congratulations for posting the most obscure biblical reference I've ever seen on TR.

do I wins any internets?

I think I had originally pictured the ant and the grasshopper, but I don't know how many of us gerbils read that (or were read that) as a child. Plus, you know, they're cows. Once cows got in there, all I wanted to say was seven fat cows, and seven lean cows.

[Ifalna]

do I wins any internets?

It sure made me chuckle, don't know whether that counts for anything though.