TSMC is also positioned to prosper with new business from Apple, Nvidia and — barring more Trump intervention — HiSilicon.
Taiwan Semiconductor Manufacturing Company (TSMC) is likely to see a strong rebound starting next year as fabless companies such as AMD grab market share from Intel, according to Wedbush Securities senior vice president Matt Bryson.
Fabless companies like AMD, Apple, HiSilicon, Nvidia and Qualcomm are the key TSMC customers that will increase orders on market share gains and high growth in end markets, Bryson said in an April 27 report provided to EE Times.
“AMD at the end of last year was about 50% converted to TSMC,” he said in an interview with EE Times. “That will continue, plus AMD will continue to see some share gains particularly in CPUs both in servers and PCs.”
China’s desire for semiconductor independence and Intel’s recent struggles to advance its manufacturing are trends that should push relatively faster growth for foundries and particularly advanced process node capacity, Bryson said.
While about 50% of AMD’s sales use TSMC’s 7nm production, Bryson expects nearly all of AMD’s output to be made at leading-edge nodes by 2021. That shift during the next 18 months will add about $1 billion to TSMC’s sales, he said.
AMD’s market share in the PC and server markets will rise to as much as 40 percent during the 2022/2023 time frame, he added. That shift in business to AMD from Intel will likely add another $1 billion in sales for TSMC, he said.
When Microsoft and Sony begin to build their new iterations of the Xbox and PlayStation, AMD will see a steep ramp in console-related silicon sales worth about $1 billion in the second half of 2020 and another $1.8 billion in 2021, according to Bryson. All of those chips will be made using TSMC’s 7nm+ capacity, he said, adding that TSMC has had no CPU/GPU content in earlier consoles.
Chinese chip design houses, which account for about 20 percent of TSMC’s demand, will help lift sales at the world’s largest foundry as China’s chipmakers like SMIC still lag three generations behind TSMC and face huge hurdles in catching up, according to the report. The U.S. government has blocked SMIC from acquiring EUV lithography equipment from ASML that’s crucial for advanced process production, Bryson said.
The U.S., which aims to impede China’s growth in the chip industry, may also clamp down on TSMC’s sales to HiSilicon, the chipmaking arm of Huawei. TSMC uses its 7nm process to make HiSilicon’s Kirin 980 processor for 5G smartphones. HiSilicon, which accounts for about 15 percent of TSMC’s demand, is TSMC’s second-largest customer after Apple.
HiSilicon Breaks Into Semiconductor Top 10
Potential U.S. restrictions on TSMC sales to HiSilicon would be a downside for the Taiwan chipmaker during the near term. China will work around any potential U.S. export restrictions as it continues to seek manufacturing self-sufficiency, Bryson said in the report.
Apple will probably combine its MacOS and iOS and shift production from Intel to internally developed Arm-based processors for its PCs, according to the report. That shift will increase Apple’s demand with foundries, Bryson said.
For Apple, the advantages would be to further lock customers into its ecosystem and realize cost advantages by intertwining PC and handset/tablet hardware and software development, Bryson said.
Apple’s agreement to buy modems from Qualcomm instead of Intel will continue as Apple transitions to 5G chips, according to the report. That move will provide as much as $2 billion in sales to foundries in light of higher 5G modem expenses, Bryson said. TSMC is likely to be the largest beneficiary of the shift, he added.
Nvidia probably placed orders worth as much as $600 million with TSMC and Samsung for data-center related chips in 2019, according to the report. That number is likely to double in 2021, according to Bryson.
Intel has failed to successfully address certain data center markets including AI-specific tasks like inference, training and deep learning as well as 5G modems, high-speed NICs and HPC transport, ceding much of this business to its fabless competitors, the report said. These struggles have helped place Intel competitors including AMD, Nvidia and Qualcomm in positions to gain from growth trends and grab market share from Intel, according to the report.
The race for leading-edge production is down to two companies, and the hurdles are high.
About a third of TSMC’s production is on sub-10nm nodes with TSMC likely to exit the year with close to 50 percent of production on sub-10nm processes as 5nm production ramps, according to the report.
In contrast, excluding Samsung, TSMC’s competitors remain on 10nm+ process nodes. GlobalFoundries, the third largest foundry, decided not to pursue advanced node progression in 2018 and instead to focus on lagging nodes.
Most of Intel’s production remains on 14nm parts. While Intel’s 14nm process roughly maps to TSMC’s 10nm technology, TSMC is currently in the lead with 7nm, the report said.
Leading edge nodes drive foundry growth, Bryson said. “We would point to AMD, Nvidia, Qualcomm, etc., standardizing their mainstream products on leading-edge nodes, as a sign of the importance of leading-edge parts in fueling advances across technology.”