Intel Has Goods to Win Apple Foundry Biz, Says Jefferies
April 23, 2012, 10:19 A.M. ET.TSMC: Intel Has Goods to Win Apple Foundry Biz, Says Jefferies.
Jefferies & Co.’s Robert Lea this morning reiterates a Hold rating on the Taipei-traded shares of Taiwan Semiconductor Manufacturing (2330TW), offering up a think piece to clients on the prospect Intel (INTC) might gain some business fabbing chips for Apple (AAPL).
“While TSMC’s stock price might not be factoring in a 2nd source win with Apple, neither is it discounting the rising possibility that Intel could win the business,” writes Lea.
Writes Lea, it’s likely Apple will go to a second source for its foundry needs in addition to current arrangements with Samsung Electronics (005930KS), and Intel seems the right partner to give Apple what it wants:
We continue to expect Apple to appoint a 2nd source foundry partner. However, while we previously thought TSMC was best placed to win the business, we increasingly think Intel is in with a chance. Apple maintains close control of its supply chain and we are uncertain that TSMC will ‘dance to Apple’s tune’ given its core multi-customer philosophy. We therefore think it less likely TSMC would build a dedicated facility for Apple. Nor do we think TSMC has the appetite to operate an Apple-funded facility, given the lack of control and margin dilution this would entail […] Intel has plenty of capacity coming on line, aiming to double its fab square footage by end-2013. Intel also has ambitious plans to drive new opportunities in Smartphones. Although Intel’s exact intentions in foundry remain unclear, its CEO did highlight its foundry offering at the Q1 results.