Fri, Nov 30, 2018 - Page 11 News List

TSMC on verge of taking Intel’s chipmaking crown

PARADIGM SHIFT:While Intel focused on PC and server chips, the advent of the smartphone provided TSMC with a chance to relentlessly improve its technical know-how

Bloomberg

For more than 30 years, Intel Corp has dominated chipmaking, producing the most important component in the bulk of the world’s computers. That run is now under threat from a company many Americans have never heard of.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was created in 1987 to churn out chips for companies that lacked the money to build their own facilities. The approach was famously dismissed at the time by Advanced Micro Devices Inc (AMD) founder Jerry Sanders.

“Real men have fabs,” Sanders said at a conference, using industry lingo for factories.

These days, ridicule has given way to envy as TSMC plants have risen to challenge Intel at the pinnacle of the US$400 billion industry.

AMD has chosen TSMC to make its most advanced processors, having spun off its own struggling factories years before.

TSMC’s threat to Intel reflects a sea change in chipmaking that has seen one company after another hire TSMC to manufacture the chips they design.

Hsinchu-based TSMC has scores of clients, including tech giants Apple Inc and Qualcomm Inc, second-tier players like AMD and minnows such as Ampere Computing LLC.

The explosion of components built this way has given TSMC the technical know-how needed to churn out the smallest, most efficient and powerful chips in the highest volumes.

“It’s a once-in-a-50-year situation,” said Renee James, the former No. 2 at Intel who heads start-up Ampere.

Her company is less than two years old and yet it is going after Intel’s dominant server chip business. That Ampere thinks it can compete is a testament to stumbles by Intel and TSMC’s ability to benefit from those mistakes.

It has been a decade since Intel faced major competition and its 90 percent revenue share in computer processing is again to deliver record results this year.

However, some on Wall Street are concerned, and rivals are emboldened, because TSMC has a real chance to replace Intel as the best chipmaker in the business.

Last year, the Taiwanese company amassed a bigger market value than its US rival for the first time.

What Intel investors really worry about is that the largest Internet companies will start making their own chips.

Earlier this week, Amazon.com Inc, the biggest cloud-computing company, announced its first in-house server processor.

The Graviton is made by TSMC and it supports a new version of Amazon’s service that is more than 40 percent cheaper than a similar offering powered by Intel chips, the company said.

Without TSMC’s capabilities, Amazon would not have the option to go it alone, Amazon Web Services Inc vice president Matt Garman said.

“More competition in this space is great,” he said.

Production bragging rights in semiconductors are judged by the width of the space between lines on the tiny circuits that give chips their function. Shrinking that gap — measured in nanometers, or billionths of a meter — gives designers the ability to make chips that count faster, use less power, store more data or simply cost less.

In the highest-end processors, where Intel makes most of its money, space is at a premium. A Xeon server processor crams billions of transistors into an area the size of a postage stamp.

Intel was the first to use 14-nanometer technology at scale in 2013, Goldman Sachs Group Inc said.

It will not have a 10-nanometer process ready for prime time until the end of next year — by far the longest wait in its history.

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