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.
SEMICONDUCTOR SERVICES: A company executive said that Taiwanese firms must think about how to participate in global supply chains and lift their competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it expects to launch its first multifunctional service center in Pingtung County in the middle of 2027, in a bid to foster a resilient high-tech facility construction ecosystem. TSMC broached the idea of creating a center two or three years ago when it started building new manufacturing capacity in the US and Japan, the company said. The center, dubbed an “ecosystem park,” would assist local manufacturing facility construction partners to upgrade their capabilities and secure more deals from other global chipmakers such as Intel Corp, Micron Technology Inc and Infineon Technologies AG, TSMC said. It
EXPORT GROWTH: The AI boom has shortened chip cycles to just one year, putting pressure on chipmakers to accelerate development and expand packaging capacity Developing a localized supply chain for advanced packaging equipment is critical for keeping pace with customers’ increasingly shrinking time-to-market cycles for new artificial intelligence (AI) chips, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said yesterday. Spurred on by the AI revolution, customers are accelerating product upgrades to nearly every year, compared with the two to three-year development cadence in the past, TSMC vice president of advanced packaging technology and service Jun He (何軍) said at a 3D IC Global Summit organized by SEMI in Taipei. These shortened cycles put heavy pressure on chipmakers, as the entire process — from chip design to mass
Germany is to establish its first-ever national pavilion at Semicon Taiwan, which starts tomorrow in Taipei, as the country looks to raise its profile and deepen semiconductor ties with Taiwan as global chip demand accelerates. Martin Mayer, a semiconductor investment expert at Germany Trade & Invest (GTAI), Germany’s international economic promotion agency, said before leaving for Taiwan that the nation is a crucial partner in developing Germany’s semiconductor ecosystem. Germany’s debut at the international semiconductor exhibition in Taipei aims to “show presence” and signal its commitment to semiconductors, while building trust with Taiwanese companies, government and industry associations, he said. “The best outcome
Semiconductor equipment billings in Taiwan are expected to double this year, as manufacturers in the industry are keen to expand production to meet strong global demand for artificial intelligence applications, according to SEMI, which represents companies in the electronics manufacturing and design supply chain. Speaking at a news conference before the opening of Semicon Taiwan trade show tomorrow, SEMI director of industry research and statistics Clark Tseng (曾瑞榆) said semiconductor equipment billings in Taiwan are expected to grow by an annual 100 percent this year, beating an earlier estimate of 70 percent growth. He said that Taiwan received a boost from a
RSS