Report: Packaging Issues, PS5 Demand May Be Hurting TSMC Production

Over the past 4-5 months, we’ve discussed repeated product shortages affecting just about every piece of high-end PC or gaming hardware currently on the market. One of the more interesting aspects of the situation has been the way it has hit everyone: Samsung-built Nvidia GPUs are hard to find, but so are TSMC-built AMD GPUs. AMD CPU prices and availability has been all over the map. The PS5 and Xbox Series S|X have been in and out of stock.

Since AMD doesn’t build its own hardware, a lot of eyeballs have focused on TSMC during this period, but it hasn’t been clear if that’s where the actual problem lies. One explanation is that huge demand + ramping up new designs have created bottlenecks in the market. Another — one we haven’t dug into much, due to not knowing where the problem might be coming from — is that there’s an upstream issue with a different company in the chip production supply chain that’s feeding this issue.

Reports from fall, 2020 suggested that TSMC was working through a shortage of ABF substrate. ABF (Ajinomoto Build-up Film) is a resin that insulates modern ICs and resists expansion and contraction based on changes in temperature. Connections bridging the gap between the nanoscale (IC) and millimeter-scale (packaging) are made through an ABF layer, as shown below:

ABF is incredibly important to the chip-packaging process, and an ongoing shortage is hitting pretty much everyone who employs advanced packaging standards. This could fit our criteria for an important piece of the overall explanation of what’s going on, because this isn’t an issue that would impact just Nvidia, AMD, Intel, or any other single company. If TSMC can’t buy enough of it, the impact could ripple out across the market, hitting a number of companies. Apple, Qualcomm, and Samsung all use ABF as well. DigiTimes reported on a shortage at least as early as June 2020 and claimed it could widen and worsen in 2021. That prediction seems to have borne fruit.

Low yields on GDDR6 have also been blamed for GPU shortages, though again, it’s not clear exactly which component shortages are driving which problems. But it’s clear this goes beyond yield problems, which makes sense — we have heard rumors of low 8N yields at Samsung, but nothing about any equivalents at TSMC. We also know that AMD has been shipping 7nm silicon out of TSMC since mid-2019, implying that the node should be pretty mature by now, even for high-power desktop chips and GPUs. The fact that we’re seeing global problems does suggest there might be additional variables in play.

Also, the crypto market is exploding again, which is going to help exactly no one and nothing when it comes to finding a solution to ongoing shortages. A report from HardwareTimes claims that Sony and Microsoft have reserved up to 80 percent of AMD’s 7nm production for consoles. Presumably, this is a reference to 80 percent of the allocation AMD purchases from TSMC, as opposed to an implication that either firm bought 7nm fab space “from” AMD (AMD is a chip designer, not a manufacturer). A situation in which AMD allocated 80 percent of its production to consoles isn’t as crazy as it sounds if you assume the agreement was almost certainly a short-lived one, intended to cover only the initial launch volumes. Of course, the chronic shortages and ongoing demand have guaranteed the consoles would remain hot-ticket items for longer. Since this has been the case with every other high-end product, we’re basically stuck in the high-tech equivalent of sixteen people trying to go through a doorway at the exact same time. Winners? Nobody. Losers? Anyone trying to buy hardware without selling a kidney and/or making a Faustian bargain over delivery time frames.

TSMC’s major suppliers for ABF are all rumored to be experiencing ongoing shortages. There are rumors that AMD can’t currently meet demand for notebooks because of the ABF problem and that the issue could worsen in Q3 2021 when Zen 3 notebooks come to market. Up until now, we’ve heard a lot of rumors that the shortages would ease in March-April 2021, but if the ABF angle is true, it could take longer.

Feature image credit: Laura Ockel/Unsplash, PCMag

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