Many people in the industry have commented that Intel, once the leader, has become a hero in the twilight, while TSMCs advanced manufacturing process has made other enterprises in the semiconductor industry look pale.
Intels chips are going to be outsourced?
Intels plunge was related to its second quarter report.
The companys second quarter revenue was $19.7 billion, up 20% from a year earlier. Among them, the revenue of data-based business increased by 34% year-on-year, accounting for 52% of the companys total revenue, and that of personal computer centered business increased by 7%. These results are due to strong sales of cloud computing, notebook, memory and 5g products.
In the second quarter, revenue from the companys PC centric business grew 7% year-on-year, driven by continued work at home and home. Sales of desktop computers fell as demand shifted to laptops.
Net profit in the second quarter was $5.1 billion, up 22% from $4.2 billion in the same period last year.
According to GAAP, the companys earnings per share were $1.19 in the second quarter, up 29% from the same period last year; if not calculated according to non GAAP, the companys earnings per share was $1.23, up 16% from the same period last year.
Intel expects revenue of about $18.2 billion in the third quarter of 2020, an operating profit margin of about 28%, and earnings per share of about $1.02.
In addition, the company expects revenue of about $75 billion, operating profit margin of about 30% and earnings per share of about $4.53 for the full year of 2020.
It seems that Intels performance in the second quarter was not bad, so why did its share price plummet?
The reason is that in the second quarter report, Intel announced that its CPU with 7 nm technology will be released 6 months later. In a press release, Intel said the yield of the 7-nanometer process is now 12 months below the companys internal target. The low yield means that the company is not yet able to produce its 7-nanometer process economically. Intel said the 7-nanometer process will not be available on the market until the second half of 2022 or early 2023.
With the delay of 7Nm technology, the gap between Intel and TSMC has widened, wrote Roland Shu, an analyst at Citigroup. The news implied a significant shift in technology leadership, with Intels CPU manufacturing business vulnerable and likely to outsource CPU manufacturing to OEM manufacturers such as TSMC..
Susquehanna financial group, a US investment bank, wrote: the possibility of Intel catching up with or surpassing TSMC is almost nil, or may never catch up, for at least the next five years..
At a time when Intel was still unable to develop a 7-nanometer CPU, its competitor, TSMC, had not only achieved mass production of 5-nm process, but also aimed at more advanced processes.
TSMCs advanced manufacturing process is one of the best. It has just announced that its 3-nanometer process is expected to be in mass production in 2021 and in the second half of 2022.
This paper summarizes the layout of TSMCs advanced manufacturing process in recent years. The industry estimates that TSMC 2nm will be launched in 2023-2024.
Exclusive 7 nm process orders
TSMC made a net profit of 28.6 billion in the second quarter
TSMC is the worlds leading semiconductor processing enterprise, accounting for half of the global chip OEM market, and is the industry leader. Samsung ranked second, but its market share was only 20%. At present, SMIC is also trying to catch up, and its 14 nanometer chip technology has been applied to Huawei mobile phones. However, it is still very difficult to catch up with the 5-nanometer technology of semiconductor and Samsung.
At present, in the global chip manufacturing industry, there are few manufacturers with high-end chip manufacturing capacity, especially those with manufacturing processes below 7 nm. There are only TSMC and Samsung in the world.
According to the revenue chart by process disclosed by TSMC, it is obvious that the revenue from high-end chips below 28nm (28nm, 16nm and 7Nm) accounts for nearly 80% of TSMCs total revenue.
TSMC has a higher yield and a more stable production cycle. Therefore, TSMC has almost all the orders in the field of 7Nm process, and its pricing power is very high. At the same time, TSMC revealed that the demand for 5-nanometer process is very strong, and this demand will continue until 2022.
In addition, TSMCs 3-nanometer process is expected to be mass produced at risk in 2021 and in the second half of 2022. Compared with the 5-nanometer process, the 3-nanometer process will increase the density by 70% and increase the power by 20-25%.
With technical support, TSMCs performance has been on the rise in recent years. With the spread of the new crown epidemic, TSMC still delivered a brilliant report card in the second quarter.
On the afternoon of July 16, TSMC announced the financial situation of this quarter at the Q2 corporate presentation meeting in 2020. As expected, the worlds largest semiconductor foundry did not fail to live up to expectations. Q2s revenue reached NT $310.7 billion (RMB 73.8 billion, US $10.5 billion), up 29% year-on-year.
But the most surprising thing is that TSMCs Q2 net profit, as high as NT $1208 (about US $4.1 billion, RMB 28.6 billion), surged 81% year on year, not only exceeding analysts expectations, but also reaching the highest level in six years.
In addition, TSMC Q2s gross profit margin was as high as 53%, exceeding the 50% - 52% forecast given by analysts before.
It is worth noting that due to its excellent performance, TSMC adjusted its overall revenue growth forecast in 2020 from 10% to 15% before to 20%; at the same time, they also raised the capital expenditure amount to $16 billion to $17 billion; however, at the beginning of the year, they had lowered the income forecast for 2020 because of the expected economic downturn.
Huaweis worries caused by cut off supply
TSMC accounts for half of the chip industry, and its customers cant be underestimated. Huawei is one of them. However, due to the ban issued by the United States, TSMC announced on July 16 that it would cut off Huaweis power supply from September 14 If the US ban remained unchanged. According to TSMCs financial report in 2019, Huaweis orders account for 14% of TSMCs total business, and is one of TSMCs most important high-end chip customers (below 14nm), second only to Apples 23%. If the power supply is cut off, then TSMCs high-end chips below 14 nm are bound to have a large order gap. Liu Deyin, chairman of TSMC, said at the press conference that in the short term, the impact of failure to supply to China is inevitable. TSMC is actively cooperating with other customers to fill the gap left by Huawei. Source: Yang Qian, editor in charge of economic report in the 21st century_ NF4425
TSMC accounts for half of the chip industry, and its customers cant be underestimated. Huawei is one of them. However, due to the ban issued by the United States, TSMC announced on July 16 that it would cut off Huaweis power supply from September 14 If the US ban remained unchanged.
According to TSMCs financial report in 2019, Huaweis orders account for 14% of TSMCs total business, and is one of TSMCs most important high-end chip customers (below 14nm), second only to Apples 23%. If the power supply is cut off, then TSMCs high-end chips below 14 nm are bound to have a large order gap.
Liu Deyin, chairman of TSMC, said at the press conference that in the short term, the impact of failure to supply to China is inevitable. TSMC is actively cooperating with other customers to fill the gap left by Huawei.