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Intel Corporation Message Board

  • stockjock44 stockjock44 Aug 25, 2014 3:58 PM Flag

    TSMC: To Start 16nm Production Earlier, Heat Up Competition

    How much truth is there to this article?
    TSMC: To Start 16nm Production Earlier, Heat Up Competition
    .By Shuli Ren

    The Chinese language Economic Daily News reported that Apple‘s (AAPL) foundry supplier Taiwan Semiconductor Manufacturing Company, or TSMC (TSM/2330.TW), will start its 16nm FinFET production one quarter earlier than expected, in the first quarter of 2015.

    TSMC has been a great success, capturing more than 90% of the foundry industry’s total profit. But the big debate recently is whether its main client Apple will ditch it for other suppliers next year for the more efficient 14nm or 16nm processes. TSMC has fallen about 10% from early July high after its management commented it may lose market share next year when its competitors such as Samsung Electronics (SSNGY) offer customers deep discounts for qualifying 14nm FINSET processes.

    While TSMC was skeptical of its competitors’ 14nm technology, competitive pressure must have caught up, leading to this news clip.

    Speeding up the 16nm process is good news, according to Barclays analyst Andrew Lu, who has a Buy rating:

    If TSMC is pulling 16nm FinFET production ahead by one quarter, we should see TSMC having comparable FinFET capacity (of 50,000 wafers from 29,000 wafers per month) to Samsung’s by 4Q15. With such capacity, we would expect TSMC to be 100% used for foundry customers while Samsung’s 14nm FinFET capacity would be shared by in-house handset IC production and foundry customers.

    Given TSMC’s 20nm and 16nm equipment is 95% convertible because of the same poly pitch (90nm) and metal pitch (64nm) processes, we expect TSMC to see much better FinFET yield than peers during the first four quarters of ramp-up.

    If TSMC can pull in 16nm FinFET production by one quarter, we estimate it could see US$1.5bn in foundry sales on 16nm FinFET in 2015E (5% of sales in 3Q15 and 12% in 4Q15) from the company’s earlier-guided single-digit percentage of sales from 16nm FinFET in 4Q15E (0% of sales in 3Q

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