Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is likely to benefit from orders for new processors to be used in Samsung Electronics Co’s next generation of Galaxy smartphones, JPMorgan Securities said on Monday.
Similar to its previous Galaxy S3, Samsung is expected to adopt multiple solutions for the application processors and baseband chips in its new Galaxy S4, which will be unveiled in New York on March 14, JPMorgan said in a note to clients.
For the US version of the S4, Samsung will probably use Qualcomm Inc’s Snapdragon 600 quad-core processor, which is manufactured using TSMC’s 28-nanometer (nm) process technology, the brokerage said.
However, the South Korean electronics giant may use its in-house eight-core processor for the S4 models in Europe, JPMorgan said.
“We see Samsung’s switch to Qualcomm for its US shipments as positive for the semiconductor sector,” Rick Hsu (徐緯成), a Taipei-based analyst at JPMorgan, wrote in the note.
“We believe TSMC is enjoying the extra benefits — a reason why its first-quarter revenue is expected to be stronger than seasonally expected,” he said.
At an investor meeting last month, TSMC forecast its first-quarter sales would be between NT$127 billion (US$4.28 billion) and NT$129 billion, changing little from the previous quarter despite coming during the high-tech sector’s slow season.
TSMC chairman Morris Chang (張忠謀) said the 28nm process will serve as the driving force behind the company’s sales growth for this year, with production of 28nm process chips set to triple from a year earlier.
Hsu said that TSMC, along with Samsung, are two of the few foundries capable of operating the 28nm process commercially, meaning that extra demand from Qualcomm could take away capacity for other customers.
As a result, he believes TSMC’s revenue growth in the second quarter would likely increase by less than 10 percent, which will be lower than the seasonal level, since the extra 28nm orders from Qualcomm will already be reflected in first quarter sales.
Hsu also said he expected the extra 28nm orders would benefit integrated circuit packaging and testing service providers — including Taiwan’s Advanced Semiconductor Engineering Inc (ASE. 日月光半導體) and Siliconware Precision Industries Co (SPIL, 矽品精密) — beginning in the second quarter.
TSMC shares were down 0.48 percent to NT$104.5 as of 12:09pm in Taipei trading yesterday.
ASE shares had dropped 0.61 percent to NT$24.5 and SPIL shares were down 0.32 percent to NT$31.35.