Intel Corp may add Marvell Technology Group Ltd to its foundry customer list as the world’s biggest computer chipmaker aims to expand its foundry services, Citigroup said, adding, however, that the market’s concerns over competition with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) have been overblown.
The US bank said in a report on Monday that Marvell is a potential candidate for Intel — both headquartered in Santa Clara, California — as Intel’s 22 nanometer fin field-effect transistor (FinFET) process technology would help deliver better performance in Marvell’s integrated baseband and application processors.
“While volumes are likely to be low on the outset, we suspect investors will greet any such deal favorably, as it helps to validate Intel’s foray into the foundry domain,” Citigroup Global Market Inc analyst Glen Yeung said.
Photo: AFP
However, Yeung added that the two firms have enjoyed a strong relationship since 2006, when Marvell acquired Intel’s communications and applications processor business.
In addition, Marvell needs to increase its capacity in the near term, as the company recently won baseband and application processors orders for use in ZTE Corp’s (中興) and Coolpad’s (酷派) time-division long-term-evolution (TD LTE) smartphones.
The company has also qualified for AT&T Inc’s voice-over-LTE (VoLTE) services, he added.
Even so, Citigroup’s Taiwan-based analysts said that speculations over Intel’s growing threat to TSMC are overblown.
“Unless Intel can demonstrate a technology advantage lacking in TSMC and other foundries, most foundry customers will not be willing to pay Intel a premium price as a new foundry,” Citigroup analysts Roland Shu (徐振志) and Wu Pei-chen (吳佩真) said in a separate report on Monday.
The two analysts said TSMC still holds the upper hand against Intel, citing that the US firm’s cost structure is too high to conduct a broad-based foundry business.
Shu and Wu said Intel also “has limited excess capacity for the foundry business,” while the FinFET technology gap between Intel and TSMC is “not as wide as the 2 to 3 years claimed by Intel,” according to the report.
TSMC is set to meet with investors and analysts tomorrow to elaborate on its results for last quarter and unveil its outlook for this quarter.
The company last week reported consolidated sales hit a record high of NT$597.02 billion (US$19.8 billion) for the whole of last year, up 17.8 percent from 2012.
Citigroup forecast the company to report full-year earnings per share (EPS) of NT$7.12 for last year.
As customers’ inventory corrections have ended and the ramp-up production of 20nm products for Apple Inc will start later this quarter, analysts said TSMC would show stronger business in the second quarter and the third quarter following a seasonally slow season this quarter.
Citigroup expects TSMC to see sales and EPS grow to NT$706.6 billion and NT$8.14 this year respectively.
Shares of TSMC, the world’s largest wafer foundry, rose 0.49 percent to NT$103.5 in Taipei in yesterday’s trading, while those of Intel dropped 0.12 percent to US$25.5 in New York on Monday.
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