Today I will combine the latest trends in TSMC and the chip industry to talk about my views on the trend of TSMC stocks and related semiconductor stocks. The biggest news in the past few days is that Intel has invested 20 billion US dollars to build factories and enter chip foundry.
Intel (INTC) stock forecast 2025
Intel’s new CEO Pat Kissinger released the ambitious "IDM 2.0" strategic plan on March 24
In summary, on the one hand, Intel will separate the chip manufacturing part and open up production capacity to provide foundry services. On the other hand, its own chips will expand the scope of finding other foundry companies.
For example, looking for foundries such as TSMC and Samsung, we can interpret that Intel’s future business will have two parts: one is the foundry part and the other is the chip design part. If you look at Samsung Electronics, it originally has these two parts. Samsung’s chips are produced entirely by its own foundry company
This is because Samsung’s foundry capability is second only to TSMC. Samsung will not find other companies to do foundry. Intel’s approach is very common in this industry. GlobalFoundries was actually independent of AMD in 2009.
The separation of chip design and foundry is the general trend of this industry. Intel's move to this general direction under the new CEO's leadership is also in line with the trend of the times.
In line with market expectations, let’s analyze the impact on TSMC. Intel’s entry into the foundry industry’s competition has made companies on the foundry track even more crowded. Intel announced that it has broken through the EUV-based 7-nanometer process. I think we Think of it as TSMC, the third-largest in the industry, and Samsung, the second largest in the industry, has mass-produced EUV-based 5-nanometer processes.
What are the advantages of Intel foundry?
First, it can be expected that Intel’s chip design company should try to find its foundry company to do foundry. This is the same as Samsung’s strategy. Only those that cannot be done by themselves will be handed over to TSMC and Samsung. Therefore, Intel wafer generation The company’s biggest customer will actually be itself
Since Intel is the industry leader in chip design, the starting point of Intel foundry company is very high.
Second, most of Intel’s factories are located in the United States and Europe, and most of its foundry customers are also customers in the United States and Europe, such as Microsoft, IBM, Cisco, etc.
Compared with TSMC and Samsung, Intel is closer to its customers and easier to communicate with.
Third, needless to say, the United States will provide Intel’s foundry with financial, material, and human resources at the government level. Intel is the pride of the US IT industry. It is a truly American company and possesses American core technology. The establishment of factories and foundry in the United States is in the national interest of the United States
Based on the above three points, we can see that Intel’s foundry will have a certain impact on TSMC and Samsung.
Let's analyze the disadvantages of Intel's foundry
First, it is a huge change from serving internal customers to serving external customers. This transformation is not easy to succeed.
Second, the cost in the United States is higher than that in Asia. Therefore, whether Intel can maintain its competitiveness in terms of price is still a problem. This was the reason. The foundry industry gradually shifted to low-cost Asia. GlobalFoundries with similar origins could not compete with TSMC and Samsung. Intel is hard to say there is a big opportunity
Third, many potential customers will be competitors of Intel, such as AMD, Nvidia, Qualcomm, etc. These companies will be more inclined to choose TSMC
Fourth, Intel has just broken through 7 nanometers and TSMC and Samsung have already mass-produced 5 nanometers a year ago. This determines that Intel, TSMC, and Samsung are not completely on the same subdivision track. Apple and Qualcomm’s latest mobile phone chips must It’s impossible to grab such customers with 5nm Intel
So, based on the above, my views on Intel's reform are as follows:
First, Intel’s reform is more focused on maintaining the leading position of Intel’s chip design, using the latest third-party manufacturing process to make its products maintain an advantage in the competition with AMD and Nvidia.
After all, Intel’s chip design is its core competitiveness. Intel’s chip design is the main body of Intel in the future. This is exactly the same as AMD’s original intention to spin-off GlobalFoundries.
Second, Intel’s current reform is more about stripping off the chip manufacturing part and allowing it to find work in the market, which may lead to fate. Intel’s new boss will of course not say so, but is more optimistic and emphasizes letting Intel work in foundry Look for opportunities
Third, this reorganization is good news for Intel. Intel is looking for a foundry, which can reduce costs, provide product competitiveness and breakthrough 7-nanometer technology, open up manufacturing capacity, and look for more business opportunities. Therefore, at this stage, the market recognizes Intel. Restructuring
However, in the long run, it depends on Intel’s performance. Intel has been severely suppressed by AMD in the past few years. Once found TSMC’s foundry, Intel uses the 5-nanometer process, Intel’s competitiveness will be greatly enhanced.
For AMD, Intel’s rebirth is definitely bad news. AMD’s short-term stock trend will definitely be under pressure.
Fourth, for TSMC, I think there is mixed good and bad news.
The good news is that with Intel’s manufacturing outsourcing, TSMC as the industry leader, Intel as such a large quality customer, it is certain that TSMC’s short-term revenue will increase.
The worry is that TSMC has a strong potential competitor for foundry
I personally think that in the short term, there are more joys than worries. In the long term, it is difficult to tell. It really depends on the progress of Intel’s process technology and the evolution of the industry.
I’m not very optimistic about the foundry part of Intel. I think it might end up as a second-tier competitor like GlobalFoundries. Intel has not done well in the manufacturing process in the past few years, and it will not be suddenly reborn as a result of this reform.
TSMC’s leadership is based on many advantages that cannot be replicated, such as cost, competitiveness in Asia, high R&D investment in the past, and close relationships with customers, etc.
Fifth, who is the biggest beneficiary of this Intel reform? Of course, it is ASML
Intel increases its investment and will purchase a large number of EUV lithography machines. At the same time, competition intensifies, TSMC and Samsung will spend more money on research and development of high-end processes. Therefore, ASML, which monopolizes EUV lithography machines, will have good growth in the future.
Finally, talk about my views on TSMC stocks and related semiconductor stocks. With this round of adjustments to technology stocks, the price of TSMC in the U.S. stock market has been adjusted from the highest of US$142 to about US$110.
Intel’s entry into the foundry market will make investors more worried that competition will bring short-term pressure on TSMC’s stock price. However, I think TSMC’s adjustments will also give investors who have not entered the market a golden opportunity to buy. Because TSMC can adjust to below $100 because of this negative news, it should buy without hesitation.
I have analyzed that Intel is looking for TSMC's foundry. The recent shortage of chips determines that TSMC's performance in 2021 will be very good in the long-term. The entire chip industry is thriving and the demand for foundry is strong, and there is no major problem in the entire industry. Intel's entry into the foundry industry currently sees little impact on the far-leading TSMC
And we just analyzed that Intel’s foundry may always be a second-tier competitor.
Just like there is another GlobalFoundries and SMIC. TSMC’s true competitor is still Samsung. Facing the competition,
I believe that TSMC, which has the right time, location, people, and advantages, will continue to stay ahead. Therefore, if you, unfortunately, buy TSMC during this adjustment of technology stocks and get trapped, I think you should hold Intel. The short-term negative news will pass sooner or later, and in the end, the performance will have the final say.
If you want to invest in TSMC for a long time, the recent adjustment is a once-in-a-lifetime opportunity to enter the market. Also, if you want to hedge risks, the intensified competition in foundry has made ASML sit back and reap the benefits, and it is also a good long-term investment choice.
In the chip design industry, it’s not easy to analyze thoroughly. It’s hard to say that Intel will change its structure and become the ultimate winner in the long-term.
At the same time, AMD will not wait to die. It is even more difficult to judge the future of Intel’s foundry part. At this stage, it is not possible to judge clearly by Intel CEO's ppt alone.
In any case, after all, the entire chip design industry is still very promising. The ups and downs of individual companies are sometimes not easy to see really. If you are like this, I think you can hold the chip design industry through ETFs such as tracking the Philadelphia Semiconductor Index. ETF SOXX
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