Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest independent producer of semiconductors, is reportedly throttling its supply to bitcoin mining hardware manufacturers.
Local news outlet China Money Network reported on March 5 that TSMC is limiting the access that mining hardware manufacturers have to its production output due to the extreme volatility of the mining industry. Bitmain, the world’s top bitcoin mining hardware producer, was one of TSMC’s top customers two years ago, before suddenly cutting its orders at the start of the bitcoin bear market.
With bitcoin hovering at $50,000, TSMC sees high demand for silicon from bitcoin mining hardware producers once again. Still, the company is reportedly giving priority to businesses that provide more stable demand, such as smartphone manfacturers.
As a result of TSMC’s output limits, many bitcoin mining hardware manufacturers cannot meet customer demand. According to Bitmain’s website, most of its products are sold out, and retail customers that ordered its top-of-the-line mining hardware last November will not see the machines before May. Bitmain is currently prioritizing production output for major industry players such as Blockstream, which placed a $25 million order at the end of January.
The chip shortage is not expected to end anytime soon, and is a global problem affecting multiple industries. The troubles were seeded last year, as economists wrongly predicted that the pandemic would lead to a steep drop-off in consumer spending. Companies reduced their chip orders, and semiconductor manufacturers scaled back production. The decline in spending never materialized, so manufacturers are now scrambling to meet the underestimated demand.
Bitmain reportedly gained control over most of TSMC’s available manufacturing capacity for mining chips, forcing other buyers to divide what little was left. TSMC’s income from mining chips this quarter is still expected to be comparable to what the firm will earn through its partnership with graphics processing unit (GPU) manufacturing behemoth Nvidia.