TSMC has announced that its begun volume shipments of its 16nm technology and that it expects a rapid ramp-up for its 10nm node. The foundry giant is in the unusual position of playing catch-up; after years of ruling the cutting-edge foundry business, the company was caught flat-footed by Samsung’s rapid 14nm deployment. TSMC is gunning to reverse that trend, and betting it can beat Samsung to the 10nm punch.

TSMC president Morris Chang announced that the firm will begin ramping 10nm technology soon, with volume production beginning in Q4 2016. Customer shipments are expected in Q1-Q2 2017 — a fact which, if true, might beat both Samsung and Intel to a new process node. Exactly how this will play out with 16nm production is unclear; TSMC is only now beginning shipments on that node, but plans to replace within 18 months. That’s a stark contrast to 28nm, where volume shipments began nearly four years ago, and still account for a substantial chunk of TSMC’s total revenue.

16nm revenue is expected to be small at 16nm in Q3 (single-digit revenue as compared to the rest of the company) but the plan is to aggressively ramp parts in the near-term.

EUV pushed back…. again

One consequences of this extremely rapid roadmap is that the window on EUV, already declared closed at 10nm, may have closed on 7nm as well. According to TSMC’s Mark Liu, “As you can see in our 7-nanometer development schedule that probably will not using EUV. But we are planning to exercise EUV using the 7-nanometer technology and currently we are planning to use EUV at 5-nanometer. But of course it does depend certain development criteria, milestones to be reached. And it has a good benefit from our assessment on the 7 — on the 5-nanometer that reduce a lot of many masking layers and increase a lot of better control for the 5-nanometer.”

It’s not entirely clear what TSMC means by “exercise” in this context, but I’m guessing Liu means TSMC will begin introducing EUV at 7nm either in a limited fashion or that it will use EUV lithography equipment to fab test chips at 7nm but without any intention of shipping the hardware. This still depends on EUV hitting multiple developmental milestones — milestones which, to be perfectly honest, I’m not certain it can hit. TSMC sold its stock in ASML earlier this year (the two companies signed a much-discussed agreement in 2012 to accelerate EUV deployments). Both firms claim that their relationship remains strong.

Samsung, of course, has announced its own aggressive 10nm ramp with a target volume production date of end-of 2016, but it’s anyone’s guess as to whether either company can hit these targets. There are two ways to read the current situation. One way would argue that Intel, which has long been held to have the best foundry technology available in the industry, has made a series of missteps that cost them that crown. With 10nm delayed now to 2017, Intel can, at best, hope to match its competitors. Granted, Intel’s 14nm technology is superior to both TSMC’s and Samsung’s in multiple metrics, but that superiority has not won the company revenue-positive mobile market share or made its 14nm or 10nm ramps easier.

The other view is that the problems Intel is encountering have far more to do with physics than any foundry-specific deficiency. This view would argue that any problems Intel encounters at smaller nodes are likely to prove greater obstacles to TSMC and Samsung, and that all this talk of launching 10nm by Q4 2016 is a paper war. Relentless shoving from the likes of Qualcomm and Apple could risk pushing foundries to agree to impossible delivery schedules in an attempt to keep their customers happy. Certainly we know that the problems associated with EUV aren’t related to any specific foundry. Without EUV, companies will have to rely on double, triple, or quadruple patterning, with all of the mask costs and defect density increases that this will represent.

Three years ago, I was firmly in the “Intel will continue to extend its manufacturing lead” camp. Today, I’m not so sure. Intel may deliver a 10nm process that’s superior to the competition, but if TSMC and Samsung hit their delivery dates, it will be competing based solely on a same-node manufacturing advantage. In the past, it’s been able to deliver the advantages of new nodes combined with best-in-class same-node advantage. The foundries have a chance to close the gap with Santa Clara.