TSMC core making Intel gets angry from analysts

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 TSMC core making Intel gets angry from analysts


Early on Monday (July 27), Taiwans industrial and Commercial Times reported that Intel had reached an agreement with Taiwan chip manufacturer TSMC to start mass production of processors or graphics cards using the optimized version of the latters 7Nm version next year, with an estimated production capacity of 180000.

In this regard, Cowen & Co., an American investment bank, pointed out that Intels adoption of third-party OEM means a huge transformation in the semiconductor industry, and the companys biggest differentiation advantage will no longer exist.

Taiwan media also reported that AMD hopes to take more market share of X86 processors in the case of Intels advanced process delay, so it will also compete for TSMCs production capacity. Its chip production next year will double compared with this year, and will become the largest customer of the latters 7Nm process next year.

Photo source: Taiwan Business Times

On Thursdays earnings call, Intel CEO Bob Swann revealed that due to the defect mode in the 7Nm process, the current yield is about 12 months behind the internal target, while the launch of the processor based on the 7Nm process will be delayed by six months until 2023 at the latest.

In contrast, AMD, its main competitor, continued to nibble Intels market share from last year to this year because it began to use TSMCs 7Nm process in 2018. Therefore, whether the latter is more inclined to fabless model has become a topic of widespread concern in the global semiconductor industry.

After Bob Swann revealed that he would entrust a third party to do the work, the industrial and Commercial Times reported that Intels 10nm transistor density was slightly better than TSMCs 7Nm process, which was equivalent to the latters 6nm process. In the second half of the year, the two sides will start to cooperate to redesign the optical masks of some of Intels 10 nm processors or graphics cards to meet the TSMC process. Next year, the former will start to use TSMCs 6nm production, with 180000 chip capacity already reserved.

In fact, outsourcing is the norm in the $400 billion global semiconductor industry. But Intel has been combining chip design with in-house production for nearly 50 years, and the company recently even plans to mass produce processors for other companies.

The lack of capacity has been troubling Intel, whose 10nm process was originally planned for mass production in 2017, but it has only recently begun mass production.

After Intel announced the 7Nm process delay, Stacy Rasgon, an analyst at Sanford Bernstein, said bluntly: theres nothing more to say. No matter how much credibility they have, theyve lost it now.

Bob Swann, CEO of Intel

Cowen & Co. analyst Matt Ramsay believes that outsourcing will mean a big change in the industry, and Intels biggest differentiator will no longer exist.

He said that it is not easy for Intel to let TSMC contract, and other customers competing with the former may object to TSMC giving priority to Intels needs. And TSMC may be reluctant to add a lot of new capacity to Intel, which is likely to switch back to its own plants in the future.

At the same time, the industrial and Commercial Times reported that AMD will begin to convert zen3 processor and rdna2 graphics chip before the end of the year. With the delay of Intels process promotion, the former is expected to gain more market share of X86 processors, so it will increase the investment in TSMC. It is expected that the company will obtain 200000 pieces of 7Nm / 7Nm + production capacity in the whole year next year, which is about double that of this year and will become TSMC Next year, the largest customer of 7Nm process.

According to the report, TSMC began to convert part of its 7Nm production capacity to 6nm in the second half of the year, and will enter mass production by the end of the year. As there is no sign of loosening the ban on Huawei in the United States, the market originally expected that TSMC would not have Hisilicon orders, which would lead to a capacity vacancy in the 7Nm generation process next year.

However, with Intels decision to commission TSMC to contract for next years 6nm production capacity, amd has expanded its orders and won most of the 7Nm / 7Nm + capacity. TSMCs advanced manufacturing process will remain fully loaded in the first half of next year.

Source: observer.com editor in charge: Wang Fengzhi_ NT2541