Intel Corp’s earnings conference call on Thursday is expected to clarify the US semiconductor giant’s outsourcing production plans, which would be crucial regarding Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) performance, analysts said.
“TSMC stands to benefit if Intel outsources more of its fabrication to foundries,” SinoPac Securities Investment Service Corp (永豐投顧) analysts said in a note on Friday.
Yuanta Securities Investment Consulting Co (元大投顧) was more cautious, saying that Intel’s contribution initially would be limited, but its outsourcing plans would still highlight TSMC’s leadership in technology, it added.
Photo: Reuters
“Intel will continue to manufacture server or high-end central processing units [CPUs], which have higher margins and contain more key technology,” Yuanta analysts said in a separate note on Friday.
However, Intel would outsource lower-end CPUs or discrete graphics processing units (GPUs) to foundries, they said.
“TSMC is expected to start receiving Intel orders in 2022, with 4 to 5 percent sales contribution initially,” Yuanta analysts said. “Although the volume may not be comparable to handset application processor ... orders, winning Intel orders highlights TSMC’s leading industry position.”
At its earnings conference on Thursday last week, TSMC announced that it would substantially raise its proposed capital expenditure to US$25 billion to US$28 billion this year, grabbing the attention of market watchers.
The announcement came amid a surge in demand for semiconductors, and ahead of Intel’s anticipated outsourcing news.
TSMC said that it would allocate most of its spending on advanced process technologies, including 3, 5 and 7-nanometer technologies — because of the multiyear trend of 5G and high-performance computing-related applications — and support its customer’s capacity needs.
Analysts said that TSMC’s capital expenditure budget for this year is far above the record-high US$17.2 billion in spending allocated last year, and also significantly higher than market predictions of US$20 billion to US$22 billion.
“TSMC’s technology leadership and ability to finance huge capital expenditure budgets underpin its leadership in advanced processes,” SinoPac analysts said.
Capital Investment Management Corp (群益投顧) said the higher capital spending indicated that TSMC would likely embrace additional orders related to advanced process technologies from some clients.
"MediaTek Inc (聯發科) may adopt TSMC’s 5-nanometer process in its flagship application processor (AP) in 2021, and Apple Inc may continue adopting TSMC’s 5-nanometer process in 2021. Additionally, Qualcomm Inc might transfer orders of its 5-nanometer process AP in late 2021 from Samsung to TSMC ... while Intel might also adopt TSMC’s 5-nanometer process in its new CPU product in the second half of 2021," Capital said in a note on Friday.
"As Advanced Micro Devices Inc has developed Zen 4 architecture products made via 5-nanometer process, Intel may face increasing pressure amid stagnant process development," it said.
TSMC’s massive spending plans could also help alleviate some industry concerns about a shortage of semiconductors, as GPUs, automotive semiconductors and APs have been in short supply recently, analysts said.
An increase in PC gaming due to people staying at home more during the COVID-19 pandemic and in demand for cryptocurrency mining have aggravated the shortage of GPU products.
Last week, chip designer Nvidia Corp said that GPU supply is very tight, and the situation is likely to persist until April, foreign media have reported.
Meanwhile, auto demand recovered in the second half of last year, but a lack of capacity has made it impossible for foundry firms to rapidly ramp up production of automotive semiconductors, NH Investment & Securities Co said, adding that the problem might remain unresolved through the first half of this year.
“A long-term boom in the foundry industry looks to be kicking off. Intel’s announcement of outsourcing production, scheduled for end-January, is also positive for the foundry industry,” the Seoul-based brokerage said in a note on Friday.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
RSS