The landscape of advanced semiconductor manufacturing is constantly shifting, driven by global demand for cutting-edge technology. In the second quarter of 2024, a significant surge in revenue from the China region for Taiwan Semiconductor Manufacturing Company (TSMC) highlighted this dynamic, with figures jumping to 16% from just 9% the previous quarter. This notable increase is largely attributed to the commencement of shipments for 3nm process mining application-specific integrated circuits (ASICs) for Bitmain, a key player in the cryptocurrency mining sector.
While high-performance GPUs and CPUs face certain export restrictions, other advanced chips, such as those designed for cryptocurrency mining and mobile processors, continue to be developed. This indicates a strategic navigation of the current regulatory environment by Chinese IC design firms, who are progressively adopting 3nm, 5nm, and 7nm process technologies for various applications.
TSMC's Key Client Structure and Market Dynamics
TSMC's revenue is highly concentrated, with its top ten clients accounting for an estimated 85% to 90% of its total income. Apple remains the undisputed primary client. The position of the second-largest client has become more defined with the rise of generative AI, now firmly held by NVIDIA, surpassing other giants like AMD, Qualcomm, and MediaTek.
Following the departure of Huawei's HiSilicon, which was once TSMC's second-largest global client and its largest in China, Unisoc emerged as the leading client in the region. However, its scale is not comparable to HiSilicon's former footprint. Looking ahead, Intel is expected to significantly increase its chip orders with TSMC, potentially securing a position among the top three clients alongside Apple and NVIDIA in the near future.
The Special Case of Mining ASICs and Chinese Tech Ambitions
Cryptocurrency mining ASIC chips represent a fascinating exception in the world of advanced semiconductors. Unlike high-performance computing chips that face scrutiny, mining ASICs are not subject to the same export controls. Their function is singular: to perform the specific calculations required to mine cryptocurrencies as efficiently as possible. Utilizing advanced nodes like 3nm is purely a pursuit of speed and power efficiency, not general computational complexity.
This has allowed companies like Bitmain to continue pushing the envelope. Their journey in chip design began with 55nm technology in 2013, rapidly advancing through 28nm. A pivotal moment arrived in 2017-2018 with the move to 16nm, making Bitmain one of the first Chinese IC design companies to adopt this node, even ahead of HiSilicon at the time. This success briefly propelled them to become one of TSMC's top five global clients.
Beyond mining, other Chinese tech companies are also eyeing advanced processes. OPPO's Zeku was an early pioneer, working on 3nm mobile processors before its unexpected closure in mid-2023. 👉 Explore more strategies for advanced semiconductor design
Now, Xiaomi is reportedly planning a renewed push into the mobile processor arena. After an initial foray with the 28nm Surge S1 chip in 2017, which received a tepid market response, Xiaomi shifted its focus to peripheral chips for imaging and power management. The company is now said to be planning a return to the main application processor market, starting with a 4nm chip and potentially followed by a 3nm design, aiming to fill the void left by Zeku.
The Evolution of Cryptocurrency Mining Hardware
The hardware used for cryptocurrency mining has undergone a dramatic evolution. Initially, miners utilized standard Central Processing Units (CPUs), quickly moving to more powerful Graphics Processing Units (GPUs). This demand created a massive windfall for GPU manufacturers like NVIDIA and AMD, who benefited from simultaneous booms in gaming and cryptocurrency.
However, the development of dedicated ASIC miners, pioneered by companies like Bitmain, revolutionized the industry. These chips, designed from the ground up for a single purpose, offered vastly superior efficiency for mining specific cryptocurrencies like Bitcoin. This shift marked the beginning of the ASIC mining era. GPU makers then found new, sustained demand in mining other cryptocurrencies like Ethereum, until the recent generative AI explosion created an even larger market for their computational power.
Frequently Asked Questions
What is a 3nm chip?
The "3nm" (3-nanometer) refers to a specific advanced manufacturing process node in semiconductor fabrication. A smaller nanometer value generally indicates a more advanced technology, allowing for smaller, faster, and more power-efficient transistors to be packed onto a single chip.
Why are mining ASIC chips not restricted like GPUs?
Mining ASICs are highly specialized processors designed for the singular task of mining specific cryptocurrencies. They lack the general-purpose computing flexibility of GPUs and CPUs, which can be repurposed for military and AI applications that are subject to export control regulations.
How did Bitmain become a major TSMC client?
Bitmain aggressively adopted cutting-edge manufacturing processes early on to gain a competitive advantage in mining efficiency. Their early move to TSMC's 16nm node cemented their market leadership and required massive, prepaid orders, propelling them into TSMC's list of top clients during crypto market booms.
What happened to Huawei's HiSilicon as a TSMC client?
HiSilicon, Huawei's chip design unit, was once TSMC's second-largest client globally. However, trade restrictions prevented Huawei from utilizing TSMC's fabrication services, leading to a dramatic reduction in its business with the foundry and a major shift in TSMC's client rankings.
Is Xiaomi developing its own phone processors again?
Yes, reports indicate that Xiaomi is making another attempt at developing its own mobile application processors (APUs). After a previous attempt in 2017, the company is now planning chips using advanced 4nm and potentially 3nm process technology to reduce reliance on external suppliers.
What is the significance of TSMC's revenue from China increasing?
The surge to 16% of total revenue in Q2 2024 indicates resilient demand for advanced semiconductor manufacturing from Chinese companies in permitted sectors, such as cryptocurrency mining and certain types of processors, despite broader geopolitical and trade tensions.