NVIDIA to Cut Down TSMC 5nm Orders with the Crypto Gravy Train Derailed, AMD Could Benefit

NVIDIA is reportedly looking to reduce orders for 5 nm wafers from TSMC as it anticipates a significant drop in demand from both gamers and crypto-currency miners. Miners are flooding the market with used GeForce RTX 30-series graphics cards, which gamers are all too happy to buy, affecting NVIDIA’s sales to both segments of the market. Before the crypto-currency crash of Q1-2022, NVIDIA had projected good sales of its next-generation GeForce GPUs, and prospectively placed orders for a large allocation of 5 nm wafers from TSMC. The company had switched back over to TSMC from Samsung, which makes 8 nm GPUs from the RTX 30-series.

With NVIDIA changing its mind on 5 nm orders, it is at the mercy of TSMC, which has made those allocations (and now faces a loss). It’s incumbent on NVIDIA to find a replacement customer for the 5 nm volumes it wants to back out from. Chiakokhua (aka Retired Engineer), interpreted a DigiTimes article originally written in Chinese, which says that NVIDIA has made pre-payments to TSMC for its 5 nm allocation, and now wants to withdraw from some of it. TSMC is unwilling to budge—it could at best hold off shipments by a quarter to Q1-2023, allowing NVIDIA to get the market to digest inventory of 8 nm GPUs; and NVIDIA is responsible for finding replacement customers for the cancelled allocation.

The same article paints a different picture for AMD: the company has reduced orders for 7 nm and 6 nm nodes; but its 5 nm orders are unaffected. AMD makes not its its next-generation RDNA3 GPUs on 5 nm, but also its next-generation “Zen 4” CPU chiplets. Any drop in demand for GPU silicon would be internally adjusted by increasing “Zen 4” chiplet orders. AMD’s growth as a processor manufacturer is no longer bottlenecked by technology-leadership, but by volumes. The company could jump at the prospect of higher 5 nm allocation, as it would enable it to increase output of “Zen 4” processors to meet rising demand of high-margin server processors with its upcoming EPYC “Genoa” and “Bergamo” processors.