In 2019, the world of semiconductors moved from its previous 14- and 16-nanometre production processes to TSMC’s new 7-nanometre node, with enormous repercussions for the entire IT sector, due to the possibilities offered by the new, increasingly dense and efficient chips, which are therefore able to improve the performance per watt of the various products.
This transition has also involved the crypto mining sector, where the giant Bitmain has been able to anticipate, releasing the first ASICs with 7-nanometre chips for Bitcoin mining already at the end of 2018.
In fact, it was in mid-2018 that TSMC, the leading Taiwanese chipmaker in the sector, started high volume production for wafers based on the first 7-nanometre DUV (Deep UV Lithography) production process, allowing customers such as Apple, Huawei, AMD, Qualcomm and even Bitmain to start mass-producing devices based on the new chips, which are the subject of years of design.
It is precisely the production processes that have always been a key element in the development and evolution of the hardware of any hi-tech device (from CPUs to mobile SoCs, GPUs, FPGAs, etc.), since the advancement of production nodes has always allowed an increase in the density of transistors per unit area, maintaining or lowering (depending on the frequency) the power consumption compared to the previous nodes.
Unfortunately, over the years the race to increasingly advanced lithographs has suffered a substantial slowdown, due in part to some difficulties in the production of machinery for these nodes, in part to the high cost and low yields offered by the first test chips produced in the first wafers, which required further refinements.
However, the current 7-nanometre production has already faced numerous problems.
The origin of TSMC’s overload
The transition from the previous 14- and 16-nanometre production processes to the current 10- and 7-nanometres has been the subject of numerous delays and problems at major foundries.
For example, Intel took two years longer than expected to develop its 10-nanometre node, while continuing to refine its 14-nanometre node so as to keep its products competitive in terms of performance while partially sacrificing efficiency.
Samsung, on the other hand, due to some delays started mass producing using 7-nanometres only in late 2019, accumulating a six-month delay compared to TSMC. Despite this, the company immediately managed to use EUV (Extreme UV Lithography) technology for this node rather than the DUV adopted by TSMC. This should ensure slightly better production yields and performance thanks to better patterning of the 7-nanometre chip layout, as well as lower production costs due to the need for fewer layers and therefore masks.
Competing foundry Global Foundries, on the other hand, has virtually cancelled its plans to develop and manufacture 7-nanometre chips due to excessive problems and costs, according to the announcement made in November of 2018.
The first 7-nanometre chips of 2018
All these problems and delays have led to growing demand from the only foundry capable of producing these chips with adequate yields and volumes: TSMC. The Taiwanese chip maker, in fact, started mass production of the 7-nanometre chips in the summer of 2018.
The first customers were certainly Apple (SoC A12) and Huawei (Kirin 980), followed immediately by Qualcomm (Snapdragon 855), AMD (first Zen 2 and Vega 20 test chips), and the mining giant Bitmain (first 7nm chip BM1391).
By observing the data reported at the end of 2018 by TSMC, it is possible to notice that about 10% of the 2018 production of 7-nanometre wafers was destined exclusively to the crypto mining sector. Of this 10%, most of the orders were certainly executed by Bitmain, given that the company has released on the market the first 7-nanometre ASIC Antminer S15 already in December 2018.
Companies such as Innosilicon, Ebang and Whatsminer, in fact, have decided to opt for the most economical 10-nanometre production process provided by Samsung. Only GMO has chosen to rely on TSMC’s 7-nanometres like Bitmain, but the poor performance of its products has led it to record a huge loss in the crypto mining sector, to the extent that the company had decided to revise its position in the cryptocurrency industry.
Among TSMC’s customers, it was (like every year) Apple, which placed 75% of the total orders for 7-nanometre chips, followed by the Chinese Huawei (HiSilicon), Qualcomm and finally AMD.
The high demand for chips in 2019 and the moves of Bitmain
In 2019, the demand for 7-nanometre chips has not stopped, on the contrary, it has increased considerably thanks to the marketing of several tens of millions of smartphone units based on Qualcomm’s new processor: the Snapdragon 855. It is enough to mention that manufacturers like Xiaomi have in fact sold almost 5 million smartphones based on this chip in just under six months (Mi 9 and Mi 9T Pro in particular).
Then there is Samsung, which in the US has marketed several million Samsung Galaxy S10 based on the same SoC (in Europe and China these devices use the Exynos 9820 instead).
In July, AMD marketed the new AMD Ryzen 3000 processors made with 7-nanometre chips, followed by the new Navi GPUs also produced with 7-nanometres. In August, the new second-generation AMD Epyc server processors were also made available to OEMs and large companies, again using TSMC’s 7-nanometre production process. Thanks to their high performance and excellent price/performance ratio, AMD’s chips are literally selling like hotcakes, to the extent that the company has had a number of difficulties in ensuring adequate availability of its products.
In the smartphone sector, Apple announced in September its new iPhones based on the A13, a new SoC made with an advanced 7-nanometre production process (EUV) manufactured by TSMC, which had to convert some old series based on the classic 7 nm DUV to meet the high demand for chips demanded by the Cupertino giant. Huawei didn’t back down either, announcing a few days later the new SoC Kirin 990 5G, also made with the 7-nanometer EUV.
On the crypto mining front, there was the rise of Bitcoin in spring 2019, accompanied by the debut of the new ASICs by Bitmain based on the new 7-nanometer chip BM1397, announced last April. This, catalysed by the growing price of Bitcoin until June, has fed the mining industry, to the point that several manufacturers of mining hardware have reported an excessive demand for devices, even three times the production capacity.
Precisely for this reason Bitmain, between the end of June and the beginning of July, ordered 30 thousand wafers of 7 nanometer chips from TSMC, chips whose delivery by the foundry is expected around the month of October/November, just in time to assemble and deliver the new Antminer S17+ and T17+, announced in recent days.
The current shortage of 7-nanometre TSMC chips
The continuous accumulation of orders from AMD and Apple, thanks to unexpected success for their products, followed also by the continuous orders from Qualcomm, Huawei and many other smaller companies, including Bitmain and recently Canaan, has forced TSMC to significantly extend the delivery time for their products.
Just last month, in fact, the foundry announced that due to the high demand for 7-nanometre chips (both DUV and EUV), followed by a huge demand for 10- and 14-nanometre chips, it was forced to increase lead time (the time required to produce the chips once commissioned), from the previous two months to the current six months. A rather important variation, which therefore forces manufacturers to plan new products very carefully, given the very long timeframes that could alter the competitiveness and therefore the revenues of a given device.
In the coming months, therefore, the situation could become very delicate, given that all the production slots of the chipmaker are full and, given the lead time situation, probably will still be for most of 2020.
The possible effects of the shortage for crypto mining
The shortage of 7-nanometre chips could have important repercussions in all those sectors where timing is often crucial. Among them, stand out the world of GPUs, the world of mobile SoC and of course also of crypto mining, in particular of ASICs, partly because of the upcoming Bitcoin halving.
It’s no coincidence that Bitmain and Canaan recently announced the new ASICs for Bitcoin mining, as there are now just under 7 months to BTC halving.
Both manufacturers expect to deliver the new products by the end of the year, thus leaving a time window of about 4/5 months to the miners to accumulate as much BTC as possible in view of the halving, so as to maximise the ROI. It’s hard to predict what will happen next. Much will depend on the price of Bitcoin after halving.
If the price is high enough, the Bitcoin mining race could continue, if instead, the same occurs what happened with Litecoin, there might be a decline of the BTC hashrate, causing most of the miners to migrate to other currencies (BCH?) while waiting for a recovery of the BTC price.
In any case, the whole crypto mining sector could be largely negatively affected by the shortage (Innosilicon is already experiencing problems for example) if the orders of the wafers made by the various manufacturers prove to be insufficient to the demand for crypto mining products. In this case, there could be a significant increase in ASIC prices for mining, caused by the scarcity of products available on the market.
This situation has already occurred several times in the past. For example, in 2017, video cards literally went off the rails, with prices that have more than tripled. Or, going back to the present day, during the summer months there were often difficulties in obtaining the new Antminer, given the excessive demand.
If the already high demand for products were to be accompanied by the aggravating lack of chips, the price of ASICs could easily duplicate, triple or increase even more, although much will depend on the price of Bitcoin, which has always been a crucial factor in determining the profitability of mining.
Potential effects also for the mining of Monero
On November 30th, Monero will implement a fork to switch to the new Proof of Work RandomX, a CPU friendly PoW. This new Proof of Work mechanism will again eliminate ASICs and FPGAs from the mining of the cryptocurrency. Not only that, since the yield in video card mining will drop dramatically, initially only the CPUs will remain suitable for crypto mining.
In recent weeks, the first RandomX-compatible mining tools have been made available, allowing users to directly evaluate mining performance with Monero’s future PoW.
From the first tests carried out, among all the processors tested, an interesting performance advantage emerged for the new AMD Ryzen CPUs, in particular for the third generation of CPUs based on the ZEN 2 architecture built on the 7-nanometre TSMC chips. These particular CPU models, in fact, boast large quantities of first, second and third level caches, practically twice as much as the first and second generation of AMD Ryzen and the current solutions offered by Intel.
Currently, the most performing model is definitely the Ryzen 9 3900x, equipped with 12 cores and 24 threads at a base clock of 3.8 GHz. This CPU can reach a hashrate close to 11500-12000 H/s, with a power consumption of about 150 watts. However, the price is not the cheapest, as it is difficult to find the Ryzen 3900x at less than 600 euros.
The model with the highest price/performance ratio is definitely the Ryzen 5 3600, a solution with six cores and 12 threads operating at a base clock of 3.6 GHz. In fact, it can get a hashrate up to almost 6300 Hash/s, all with a power consumption of about 80-90 watts for the CPU alone and a price below 190 euros.
The success of Ryzen 3000 and the shortage
At the moment, thanks to the high performance for price offered by these CPUs in all sectors (not only in mining), the sales recorded by AMD have proved to be higher than expected, leading to many difficulties in finding the best performing models, in particular the 3900X and the future 3950X, two solutions that are also very popular in mining on RandomX.
With the migration of Monero’s miners from GPUs to CPUs, many will opt for the development of systems based on the new AMD Ryzen 3000 processors (in addition to the future Threadripper 3000), risking to further compromise the already high demand for these products.
As mentioned above for ASICs, the mix between the interest of the miners and the considerable interest of AMD customers (given the excellent performance of these CPUs) combined with the shortage of 7-nanometre chips on which they are based, could have extreme repercussions on the prices of these products, which already today are virtually unobtainable at list prices (reference is made to 3900X) given the high demand.
It will, therefore, be necessary to evaluate well what will happen at the end of November and during the month of December on the Monero network, but already in recent weeks several secondary currencies (ARQ, DERO, LUX) are switching to PoW RandomX, thus further increasing interest in these CPUs.
The future of semiconductors
Samsung comes to the aid with the production of 7-nanometre EUV chips
Among all the negative news of the last weeks in the world of semiconductors, during the summer season, Samsung started the mass production of 7-nanometre EUV chips, thus joining the only manufacturer present to date, namely TSMC.
However, since Samsung is not only a foundry for third party customers but also a manufacturer of many products based on its chips, it is very likely that the South Korean giant will initially give priority to its products, in particular to the new SoC Exynos 9825 used on the freshly announced smartphone Galaxy Note 10. Not only that, the South Korean manufacturer is certainly already working on the future Exynos 9830, expected on the future Galaxy S11, which will debut during February 2020.
In any case, the company seems to have given a decent production capacity for 7-nanometre EUV chips during the early months of 2020. One of the first customers to have already commissioned their production is Nvidia, which will announce the new 7-nanometre Ampere video cards during 2020.
In the crypto mining field, it is very likely that Innosilicon (already a customer of Samsung), can take advantage of the 7-nanometres EUV to make a DIE Shrink of its ASICs currently made at Samsung but with 10-nanometres. This could happen already in the first part of 2020, although much will depend on the yields and production slots allocated by Samsung itself.
Towards 5-nanometres in late 2020
Immediately after the 7 nanometers EUV (also called 7nm+) TSMC has already announced its intention to start the production of 5-nanometre chips EUV, offering a reduction of the area with the same transient equal to 40% and an increase of 15% in performance while maintaining the same consumption.
The first 5-nanometre chips will be produced in volumes by mid-2020, although risk production will start in the first few months of the year. As always, the first customer will be Apple, with the processors of the future iPhone 2020.
We will hardly see the first ASICs with this production process before the beginning of 2021, due to the costs of the first productions, sustainable only by companies with large production volumes. Maybe Bitmain will propose an ASIC with 5-nanometre chips at the beginning of 2021 (supposedly Antminer S19 or S21), but, as always, much will depend on the price of Bitcoin, which, also considering the halving of 2020, will have to be cost-effective for the high design and development costs for future 5-nanometre chips.