TSMC weighs making memory chips for Nvidia, report says

Taiwan Semiconductor Manufacturing Co. ↗ 5.35% is considering a move into advanced memory chip production, The Information reported on Friday, citing two people with direct knowledge of the matter. The world's largest contract chipmaker has makes logic chips almost exclusively, so memory production would be a strategic shift. It would also give TSMC a larger share of the money flowing into AI hardware. According to Reuters, the company recently started planning to make a type of memory called 3D DRAM at the request of Nvidia ↗ 2.32%, its biggest customer. TSMC and Nvidia did not immediately respond to Reuters' requests for comment.reuters.com+1

Fabs, leadership and market reaction

TSMC is deciding whether to build dedicated fabs or buy an existing plant and convert it, Investing.com reported via Yahoo Finance. Micron Technology ↗ 3.83% took the second route in March, when it agreed to buy a Taiwan facility from Powerchip Semiconductor Manufacturing for $1.8 billion and retrofit it for high-end memory.finance.yahoo.com

Vice president Hsu Kuo-chin is leading the effort. He runs TSMC's advanced packaging operations and previously managed Micron's regional business, according to The Economic Times.economictimes.indiatimes.com

TSMC's U.S.-listed American depositary receipts rose sharply in early trading on Friday after the report. The gain came as chip stocks recovered from a sell-off on Thursday.finance.yahoo.com+1

Memory shortage drives the push

Memory supply has not kept up with AI demand, and the shortage has pushed hardware costs higher. Nvidia and Apple ↘ 0.06% are among the buyers looking for other sources of supply, and Apple raised prices across its hardware lineup earlier this year after its memory costs climbed. Conventional DRAM lays memory cells out in a single horizontal layer, while 3D DRAM stacks them vertically to increase capacity.economictimes.indiatimes.com+1

Risks and rivals

A move into memory would put TSMC in direct competition with Samsung Electronics, SK Hynix ↗ 2.30% and Micron, which have long dominated the market. TSMC holds patents on vertical DRAM, but The Information reported that moving from development to mass production could take years. Memory makers also go through repeated cycles of shortage and oversupply, which can swing prices and margins.economictimes.indiatimes.com

The plan could also complicate TSMC's partnership with SK Hynix. In April 2024, the two companies agreed to collaborate on HBM4, with SK Hynix planning to use TSMC's logic process to make the memory's base die. That arrangement could now put TSMC in the position of supplying a company it may soon compete against.economictimes.indiatimes.com