Wed, Jan. 14, 5:30 PM
Fri, Jan. 9, 2:42 PM
- The odds of TSMC (TSM -3.1%) losing share with top customer Qualcomm and #3 customer Apple to Samsung have grown, writes Susquehanna's Mehdi Hosseini, citing checks regarding Samsung's 14nm manufacturing process rollout. He maintains a negative rating on TSMC.
- There have been reports going back to July stating Apple/Qualcomm plan to use Samsung and Globalfoundries' jointly-developed 14nm process. Apple is widely expected to rely on Samsung for at least a part of its A9 CPU production, after tapping TSMC to manufacture the A8. Samsung began producing 14nm chips for an unnamed client (possibly Apple) last month.
- TSMC, for its part, plans to begin mass-producing 16nm chips in Q2. Its 16nm FinFET Plus process (more advanced than standard 16nm FinFET, has seen stronger customer uptake) entered risk production in November. TSMC claims a 16nm FinFET SoC consume less than half as much power as a similar SoC using its 20nm process.
Fri, Jan. 9, 2:26 PM
- With domestic economies slowing, the key theme is to find countries and stocks within those countries most exposed to external demand, says the Goldman team.
- Taiwan is the "most concentrated export story," they say, and also happens to be well-insulated from a rising rate environment in the U.S.
- Taiwan ETFs: EWT, FTW, QTWN; and there's also the FTSE Emerging Markets ETF (NYSEARCA:VWO) - which has Taiwan Semiconductor (NYSE:TSM) as a top holding.
- India and Turkey are two of the "prime beneficiaries" of lower oil prices, says Goldman, looking for continued improvement in their current account balances. The two countries' markets may also benefit from domestic rate cuts.
- India ETFs: EPI, INDY, SCIF, PIN, INDL, INP, INXX, INDA, SCIN, SMIN, INCO
- Turkey ETFs: TUR
Dec. 31, 2014, 3:31 PM
- Digitimes reports TSMC (TSM -0.2%) has advised chipmakers to "place wafer orders in advance so that they can secure a steady supply during the peak season and meet demand in time." Many clients, particularly "second-tier and smaller firms" worried about getting left out as TSMC services bigger peers, are said to have done just that.
- Sources note advance orders could help TSMC fill capacity during its seasonal downturn. The company has already seen utilization rates drop for (older) 8" fabs due to to mobile chip seasonality.
- Digitimes' report meshes with recent sales figures pointing to huge orders for Apple's A8 CPU and various other iPhone-related parts. Debate continues to swirl about TSMC's future order share (relative to Samsung) for Apple's A9 CPU.
Dec. 11, 2014, 1:54 PM
- Thanks to Apple's huge A8 CPU orders, TSMC (TSM +0.6%) had November revenue of $2.32B, -10.5% M/M (seasonality) but +64.1% Y/Y. October sales were up 55.9% Y/Y.
- Sources tell Digitimes sales are also expected to fall M/M in December, but add TSMC is still set to hit Q4 revenue guidance of NT$117B-$120B ($3.74B-$3.84B).
- Meanwhile, Samsung (OTC:SSNLF) has begun producing chips using its next-gen 14nm FinFET process for an unnamed client (quite possibly Apple), a little earlier than expected. The process is expected to be used to make Apple's A9 CPU (going into 2015 iDevices), as well as upcoming Qualcomm processors.
- TSMC might also be responsible for some A9 output, via its 16nm FinFET process (set to enter mass-production in Q2 2015).
Nov. 26, 2014, 6:25 PM
- Though Samsung "has taken the majority of Apple's iPhone chip orders for 2015," TSMC (NYSE:TSM) is believed to have landed all of the iPad-related orders for Apple's next-gen A9 processor, and is set to receive a combined 40%-50% of iPhone/iPad A9 orders, Digitimes reports.
- In December, TSMC will reportedly begin taping out A9 processors that leverage its next-gen 16nm FinFET manufacturing process. Samsung, however, is said to have won orders by offering aggressive prices for its 14nm FinFET process (previous). TSMC expects to begin 16nm mass-production in Q2 2015.
- The Korea Times reported last week Samsung will handle 80% of A-series processor output starting in 2016. TSMC is currently manufacturing the A8, and has received a huge top-line boost from doing so.
Nov. 21, 2014, 5:47 PM
- Qualcomm (NASDAQ:QCOM) has sold its Taiwanese Mirasol display plant to TSMC (NYSE:TSM) for $85M, per a TSMC regulatory filing.
- Taiwanese media previously reported Qualcomm was set to sell the plant, which it once planned to invest up to $975M in, and that TSMC wanted to use it to expands its chip assembly/testing ops.
- Meanwhile, the sell-side has been busy debating Qualcomm's analyst day guidance and commentary, with much of the attention on focused on the company's China remarks. Cowen's Tim Arcuri is somewhat encouraged. "The company provided no new substantive regulatory (NDRC/FTC/EU) updates, but seemed to strike a more definitive tone about ultimately collecting royalties on 'substantially all LTE devices.'"
- That, in turn, makes Arcuri think the most likely outcome for the China dispute is "some combination of a fine, potential changes in the royalty rate structure for all of [Qualcomm's] licensees operating in China, and/or increased investment in the local China semiconductor supply chain."
- Bernstein's Stacy Rasgon is less positive. "We do not believe the near-term regulatory issues (particularly China) are truly the primary issue anymore ... The bigger issue being how the rise of China, at scale, is changing the overarching market dynamics that Qualcomm plays."
Nov. 17, 2014, 5:27 PM
- BMO's Keith Bachman reports seeing improved U.S. iPhone 6 (NASDAQ:AAPL) supplies. "Whereas the iPhone 6 Plus was very hard to find a few weeks ago, supply has improved ... Whereas Apple stores were sold out of virtually all iPhone 6 models a few weeks ago, retail stores now appear to have almost half of the iPhone 6 models across the various carriers available for walk-in."
- Bachman does note there's still "virtually no available stock of iPhone 6 at carrier partner stores, such as AT&T and Verizon." However, online wait times at carrier stores have fallen in half to ~10 days.
- Apple's U.S. site typically shows wait times of 7-10 days for the iPhone 6, and 3-4 weeks for the 6 Plus. In October, there were multiple reports stating Apple is boosting 6 Plus production.
- Apple has added UnionPay, China's dominant payment-processor, as an App Store payment option. UnionPay credit/debit card holders will be able to link their cards with their Apple IDs, something Internet software/services chief Eddy Cue calls "one of the most requested features from [Apple's] customers in China." Quartz notes the agreement could pave the way for an Apple Pay deal.
- The Korea Times reports Samsung (OTC:SSNLF) will supply 80% of Apple's A-series app processors starting in 2016, thanks to a new agreement.
- While TSMC (NYSE:TSM) is manufacturing Apple's 20nm A8 processors, Samsung has been expected to supply a large portion (if not all) of Apple's A9 processors, leveraging a 14nm FinFET (3D transistor) process it's developing with Globalfoundries.
Nov. 10, 2014, 3:55 PM
- Taiwan's Economic Daily News reports Qualcomm (QCOM +0.1%) is set to sell a plant in Longtan, Taiwan to top foundry partner TSMC (TSM +2%) for "several billion [Taiwanese] dollars." One U.S. dollar is equal to 30.59 Taiwanese dollars.
- Back in 2011, Qualcomm announced plans to invest up to $975M to build a plant in Longtan to manufacture Mirasol color e-ink displays. But the following year, the company declared it was ending Mirasol production due to manufacturing challenges. TSMC reportedly wants to use the plant to expand its chip packaging/testing ops.
- Separately, TSMC has reported its October sales: With the help of strong Apple A8 CPU orders, revenue rose 7.9% M/M and 55.9% Y/Y to NT$80.74B ($2.64B). The company previously forecast total Q4 sales of NT$217B-$220B, good for 4%-5% Q/Q growth.
Oct. 31, 2014, 11:31 AM
- Three weeks after providing a calendar Q3 warning that triggered a massive chip stock rout, Microchip (MCHP +7.3%) has provided Q4 guidance that's in-line with lowered estimates. The microcontroller vendor, which has often seen trends emerge ahead of peers, also said it saw most of its inventory correction in Q3, and expects Q4 sales to be just "slightly below typical seasonal levels."
- Chip stocks are up strongly (SOXX +4%) on a day the Nasdaq is up 1.4%. Since Microchip's warning, a slew of analog chipmakers and microcontroller firms (e.g. Atmel, Freescale, STMicro, Intersil, Linear) have offered light Q4 guidance, and other firms have reported seeing high-end Android weakness (e.g. Synaptics, Cirrus Logic, Amkor).
- On the other hand, several mobile chipmakers (Skyworks, RF Micro, TriQuint, Silicon Motion), some of which have decent iPhone exposure, have provided strong results and/or guidance. Other chipmakers, such as Broadcom, Texas Instruments, and Xilinx, have rallied after delivering in-line guidance.
- Susquehanna's Chris Caso: "By now, we think it’s clear that the weakness MCHP saw in September is not company specific ... The question now is if the full extent of the weakness has been dialed into estimates. If it has, then this would be among the shortest and mildest downturns in many years."
- Notable gainers: SNDK +3.9%. MU +4.1%. AMAT +3.9%. TXN +4.7%. NXPI +3.9%. NVDA +3.5%. MXIM +4.7%. LLTC +5.1%. FCS +9.6%. FSL +8.8%. ADI +6.5%. TQNT +6.8%. RFMD +6.5%. ATML +5.9%. AVGO +5.1%. MRVL +4.7%. AMCC +8.9%. BRCM +3.6%. TSM +4.4%. ARMH +3.3%.
- Intel (INTC +3.5%) has recovered most of the losses it saw yesterday due to Intesil's (ISIL +3.3%) results and guidance, and related comments about a PC chip inventory correction.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Oct. 16, 2014, 11:39 AM
- In addition to slightly beating Q3 estimates, TSMC (NYSE:TSM) is guiding for Q4 revenue of NT$217B-$220B ($7.22B-$7.33B), above a $6.96B consensus.
- Strong Apple orders appear responsible for the Q4 outlook: TSMC expects chips using its cutting-edge 20nm processes to account for over 20% of Q4 wafer revenue, up from 9% in Q3.
- For now, 20nm sales are heavily tied to shipments of Apple's A8 CPU, which is used in the iPhone 6/6 Plus and is believed to be in next-gen iPad models (to be unveiled today). Bloomberg reports TSMC has also landed orders for Apple's A8X CPU, expected to go into a 12.9" iPad. On the other hand, Samsung is believed to be the supplier for the 14nm A9 CPU, expected in next year's iPhones/iPads.
- Q3 gross margin was 50.5%, at the high end of a 48.5%-50.5% guidance range. However, GM is expected to fall to 48%-50% in Q4.
- TSMC's mainstay 28nm processes made up 34% of wafer revenue, down slightly from Q2's 37%. Qualcomm, MediaTek, and other mobile processor vendors rely heavily on TSMC's 28nm offerings.
- Also: TSMC now expects its 16nm FinFET process to reach mass-production in Q2; it previously forecast Q3. The process will square off against 14nm offerings from Samsung and Globalfoundries; Apple's A9 CPU is expected to use Samsung's 14nm process.
- Q3 results, PR
Oct. 16, 2014, 8:23 AM
Oct. 15, 2014, 5:30 PM
Oct. 10, 2014, 1:42 PM
- Following Microchip's warning and related prediction of a chip industry correction, Goldman's James Covello thinks there's 15%-20% downside in industry names.
- Covello, who lowered his industry view to Cautious in August: "The last time Microchip negatively preannounced was October 15, 2012 (3% sales miss). Between October 1 and December 31, Street 2013 sales estimates for the Semi group were revised down 6% on average."
- He adds several datapoints suggest the industry has been overheating. Among them: Semi revenue growth has outpaced end-market growth, and supply chain inventory dollars rose 3% more than their 3-year average in Q2.
- "Nobody will be spared," predicts Hedgeye's Craig Berger. Benchmark's Gary Mobley observes 5 of the 6 chip stocks to have made Q3 pre-announcements have thus done so to the downside.
- Worth noting: Mobile chipmaker Silicon Motion (SIMO -8.9%) is the one chipmaker to have positively pre-announced. It might not be a coincidence that Microchip has relatively low mobile exposure.
- Observing U.S. macro data remains positive even as China and Europe soften, Longbow's JoAnne Feeney remains bullish long-term on select names. However, she has cut her short-term rating on Linear (LLTC -3.8%) to Sell, and removed IDT (IDTI -7.1%) from her trading long list.
- In addition to the names previously mentioned, the following chip stocks are seeing steep losses: AMD -5.1%. FCS -13.6%. NXPI -11.2%. CODE -11%. LSCC -9.6%. SIMG -8.1%. IPHI -7.7%. ISIL -9.5%. CY -6.9%. RMBS -7.1%. QUIK -5.7%. SQNS -5.1%. IMOS -6.5%.
- Foundries and contract manufacturers are also selling off: TSM -3.9%. UMC -2%. SMI -2.4%. SANM -11.7%. FLEX -6.8%. JBL -4%.
- Chip ETFs: SOXX, SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Oct. 6, 2014, 9:25 AM
- Micron (NASDAQ:MU) is under pressure after Samsung announced it's spending $14.7B to build a giant new chip plant. Construction will start in 1H15, and is expected to be finished in 2H17.
- Electronics CEO Kwon Oh-hyun: "Our investment into the new fabrication plant will influence the shaping of Samsung’s future semiconductor business." Samsung (like peers) has seen its mobile DRAM and NAND flash sales grow rapidly over the last two years.
- The company says capacity could be allocated to either memory or logic IC manufacturing, depending on demand. Samsung is the world's biggest DRAM and NAND flash manufacturer, but also has a growing foundry business that's hoping to grab share following next year's 14nm transition.
- Micron sold off in July after Samsung hiked its 2014 DRAM production forecasts, but eventually recovered.
- Aside from Micron, Samsung's plant could have an impact on NAND giant SanDisk (NASDAQ:SNDK), foundry kingpin TSMC (NYSE:TSM), and DRAM/NAND rival SK Hynix (OTC:HXSCL -5.1% in Seoul)
- Update (10:01AM): SanDisk is now down 1.5%. Micron is down 2.5%. TSMC is up 0.3%.
Sep. 30, 2014, 7:47 PM
- TSMC (NYSE:TSM) has launched a chip manufacturing tech platform meant specifically for ICs going into low-power embedded devices (the proverbial Internet of Things) and wearables.
- Supported manufacturing process nodes range from the dated 180nm and 90nm (useful for chips with RF circuitry and/or embedded flash) to the next-gen 16nm (FinFET). TSMC claims the processes can lower operating voltages by 20%-30% relative to its prior low-power solutions. Risk production is expected to start in 2015.
- TSMC already claims a long list of high-volume mobile chip clients - it includes Qualcomm, Broadcom, MediaTek, Spreadtrum, Nvidia, Cirrus Logic, and Apple. Many of those clients are also aggressively targeting the embedded/wearable space.
TSM vs. ETF Alternatives
Taiwan Semiconductor Manufacturing Co Ltd engages in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices, it also manufactures masks.
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