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TSMC gets large Intel chip order, Apple R&D plant - reports

Jul. 27, 2020 8:57 AM ETINTC, TSMBy: Brandy Betz, SA News Editor151 Comments
  • Taiwan-based newspaper Commercial Times reports that Intel (NASDAQ:INTC) has ordered 6nm chips from TSMC (NYSE:TSM) for next year.
  • The unprecedented Intel order would reportedly include 180,000 wafers.
  • TSMC's leading-edge capacity is now fully booked for H1 2021.
  • In other news for the pure-play foundry, Economic Daily News says Apple is setting up a display tech R&D plant within TSMC.
  • TSMC shares are up 8.2% pre-market, continuing to benefit from Intel's 7nm process yield issues.
  • Additional source: Bloomberg's Tim Culpan.
  • Post updated to include Bloomberg attribution.

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Comments (151)

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Taiwan makes nano chips, we make potato chips. Great! Long ago and far away, we used to be the go-to place, how to make things. Now we just sell "stuff"!
Value Growth Master profile picture
Intel is clearly on the decline. It has fallen so much though that soon, it could be an attractive value play. Thoughts?
Intel's dwindling fortunes started long time ago (after Andy Grove retired), and this story is very common among big companies (Boeing, GE, IBM, HP, etc.). It's the management that led companies down (or up) . Trump admin is now trying to provide enough incentives for TSM to build a top notch production facility in the US.
Moon Kil Woong profile picture
Sadly, it looks like the US is transferring its chip industry overseas while at the same time it is looking to outsource its software industry starting with Apple. While Trump destroys the steel industry and hurts global trade, it doesn't take Covid to cause massive job losses under Trump. The US dominated global business before him. We will see how we do afterwards. So far it doesn't look good.
It is amazing to learn Trump has so much power that whatever goes wrong in the world, it is his doing. Unbelievable, how everything is his fault and no one is responsible for their own shortcomings.
Yea Trump only takes credit whenever there is good news but whenever something goes wrong which is almost always under this clown he plays dumb!
Trump is just a symptom of deep political rot. It started long before him.
DimaP123 profile picture
Let's say Intel becomes fabless just like AMD. Let's say they become exactly like AMD, same orders from TSMC, same nm tech, etc.

So, now we are comparing exactly apples to apples. So, in this case Intel has a way more sales channels, better ad campaigns, better brand recognition, and a way more cash at hand. I just look at a simple point of view.
Rand Walker profile picture
@DimaP123 To continue the thought experiment: Intel also has inferior processor architecture; more security vulnerabilities; lacks workable GPU IP; lacks an "Infinity Fabric"-like smart interconnect; lacks MCM (Multi-Chip Module) experience and is hence stuck building monolithic CPUs.

Some of the above points can be partially addressed by EMIB and Foveros packaging technology, but Intel wasted years laughing at AMD's "glued together" CPUs when they should have been throwing resources at copying them.

Five years ago, Intel was making VHS tapes while AMD was making BetaMax (Bulldozer). Now Intel's making state-of-the-art VHS+++ tapes while AMD makes CDs. By the time Intel's up to CDs, AMD and TSMC will be making BlueRay disks. (Then ARM will launch a streaming service, but I'll have sold AMD and will be retired-er-er-er.)
Scott Taylor profile picture
Yeah but maybe Intel's CD's will look better then the Blu-ray's when played on OLED Tv's?

Good points. But, remember, comments here represent and talk their "book." All kinds of BS comes out when a stock trends up or down. And the BS most of the time, if not always, comes out after the reversal is underway. INTC to $80 in a year. Can you tell I am long...:)
It's only a quirk of fate that makes the AMD's selling of their foundries to be a brilliant business decision. Smart phone manufacturer's have payed the lion's share of development costs for AMD's process leadership.
Robert Hennecke profile picture
the anal ysts that stated TSMC would likely refuse Intel orders should resign for incompetency and market manipulation and be investigated by the SEC for incompetence and or market manopulation.
Autosoft profile picture
Well, 6nm is I believe a separate line than 5nm which means AMD still has their special 5nm process to use... I would say that AMD is right now TSMCs largest customer... Chiplets are reportedly yielding at 100per wafer so just Zen can have 180M chiplets... And that's just for 7nm/+ as again 5nm is a different fab and TSMC will give AMD all the capacity they can afford...

The only think slowing share growth is believing they have the volume... 2.9M server units (possibly 4.2M chips) at 4 chiplets per (on average between 8 and 64C) that's still just 16M which they can cover even with TR, Ryzen 3000, 4000H and 4000X (milan) AND RDAN / CDNA as they are averaging 175mm with Zen averaging 70mm.. That means a POWERFUL combo at 250mm...

And TSMC said they would have 14M wafers this year... Or 1m per month... That's not including any additional CAPEX so they could (if Applied Materials can do it) could mean closer to 20M wafers... I think AMD can easily do 50% of server right now... (2.6M units) with smart supply mgmt...
@Autosoft, AMD is far from TSMC's largest customer. Apple is. Not even close...
Autosoft profile picture
@David Muncier

Not what insiders are saying but maybe you can say largest 7nm customer...
@Autosoft, which insiders ? TSMC, AMD ? Apple goes through about 260M A-series app processors per year for iPhone/iPad. At roughly 100mm^2 per die(iPads substantially larger), that's probably 500-600K wafers per year at 7nm. And a big chunk of that is transitioning to 5nm as we speak for the launch of the iPhone 12 in the fall. I would be interested in your similar calculation for AMD, which admittedly is doing much larger die, but lower volumes.
trader_xx profile picture
Of course INTC does the only thing it can....Burn it's cash to try to limit AMD's wafer allocation.

Nice try INTC but it's just another bluff......
1%ers in this country did sell us out to China and its coming home to roost. Trump's act is all for show and counterproductive but to be honest would be a case of closing the barn door after the horse has bolted.
DimaP123 profile picture
what China has to do with TSMC?
Taiwan and China are much more intertwined than people realize. Will admit in this case only tangentially related though.
I am a Taiwanese. Compared with the first four presidents of the United States and Biden's succumbing to and love for China, the American people must first check the pile of American congressmen and American companies that were bought by China with money.
hanglai123 profile picture
Intel is setting up a plan (using TSMC ) to build the 7nm chip for the supercomputer only, which it promised to provide to Argon by 2021, it is not the general purpose CPU. Intel is delaying for 6 months for the 7nm chip for its own use. Clearly it is also a threat to Intel fab, you'd better shape up, or else the CEO will abandon them to go with TSMC. Hopefully the fab group at Intel will shape it up, and wake up, no more slumbering around anymore.
ReynoldsCC profile picture
Right. They have to use 7nm for the graphics chip at Argonne or the power usage will be much too high. Intel sold this $600M job by promising 7nm for their new GPU's for Aurora exascale.......
So let me get this:

Intel oversells on a further 6 months delay on a tech that Noone else has anyhow. All the while posting stunning earnings, although kind of corroding margins. (hardly surprising in the challenging economic environment)

As I understand it the 7nm Intel node is smaller than 7nm TSMC?

Intel decides to activate contingency and use the most advanced foundry on earth to ramp up production.

On these news Intel bleeds even more, dropping below 50$, heading towards the March lows of 43.

How is this not a buy?
@Niki NazaFinancial model for Intel complete broken. Owns very expensive fabs and yet has to produce with third party. What in that don't you understand?!

Broken?! By getting shoveled with orders?

lol, dont ask...

Robert Shriver Barnes profile picture
So what I'm trying to figure out is what happened to the fab capacity represented by the Huawei cancellations? Did AMD scoop up any of that capacity? Or did Intel just scoop it all up? This is talking about orders for the first six months of next year. I understood that in 2H20 AMD is getting 30k wafers per month, so 180k in six months. So 200k in the first six months of 2021 isn't that big of an increase, soooo... It seems like AMD's growth is going to continue to be supply constrained in 1H21... Unless they're going to 5nm in parallel with 7nm....
@sailorbob74133 yes 5nm in parallel.
Robert Shriver Barnes profile picture
@me2020 do you think the 200 k wafers includes the 5 nanometers production or just 7nm? Because consoles are going to take up a huge chunk of that capacity not leaving a lot for higher-margin chips at 7nm.
Robert Shriver Barnes profile picture
@me2020 Found my answer, looks like AMD scooped up Huawei's 5nm wafers:

"The monthly capacity bought by AMD includes 24,000 5nm units, pretty much the same as Huawei’s original stake."

Supposedly these are being used for RDNA3 chips early next year with Zen3 Renoir and console APUs staying on N7P / N7+.

Marvee profile picture
Could likely be TSMC for Xe GPU according to article on AdoredTV.
One of the other slide leaks included FPGA on same line as Xe GPUs. That makes sense if Intel is freeing up Agilex 10nm fab space for CPUs.

I believe Intel's eASIC chips are already being built at TSM.

I believe the Intel's Habana NNP chips are already built at TSM in 16nm.

Intel's NNP-T chips were being built at TSM, but that is now cancelled.

Intel didn't have a 7nm CPU on the roadmap until Meteor Lake in 2022, so that is one that is supposedly delayed. Perhaps they will just move it to 10nm.
Semi equip plays smokin...
Given the big order to TSM, I think that Intel has to be reconsidering capex and headcount.
Are the orders really that big to TSM? Just to put it into perspective their 7nm capacity is 140k wafers/month, thats a total of 1.68million wafers for the whole year that they can churn out. Even INTC apparently can do 817k wafers/month. Either that or the 180k and 200k are not for the full year.
scotch64 profile picture
@CL73 , good point . I would suspect its for a specific/spec. order , they are in jeopardy of contract default on ...is all. Or the shoe is gonna drop and massive layoffs are next TBA ....nonetheless it all amounts to poor decision making.

Of Course this will all be "forgiven" with national security bailout .

US gov't should also be asking the same questions as that contract in jeopardy ....Are your processes & Fabs up to speed / cutting edge edge on a national security level...?!

Last time I checked "Intel Inside" was literally riddled with backdoor holes!
Approximately 500-600K wafers in 2020 will 7nm/5nm for Apple
jaws1 profile picture
Could be attempt at limiting AMD's grow by clogging up its supply chain. Could be attempt at creating FUD for AMD investors. Definitely would be expensive for Intel due to the following reasons:

1) Most of the recent x-nm+++ "process optimizations" are probably the results of creating more hard macros (custom logic/functional blocks) to improve speed (critical timing paths). These hard macros can be very process-specific, resource intensive to develop and difficult to port to a different process.

2) Fabs are expensive to build and even more expensive to maintain. Intel has a lot of fabs to maintain. If these fabs aren't producing it can be even more expensive.

3) TSM doesn't want to piss of their loyal customers (AMD, Nvidia, etc.) and can't commit $billions to expand fab capacity to handle Intel's order, knowing that order could be short live, if Intel can sort out their process issues.
Rand Walker profile picture
@jaws1 I'm not having any luck googling for details, but I believe there were rumors in the (10 years+) past of Intel placing "spoiler" chipset orders with TSMC to deny AMD capacity. (Maybe around '09 at 32nm? There was also some Atom outsourcing back then?)

If any industry veterans are reading this I'd value your input. I've only seen the rumors in comments sections: publications are understandably reluctant to accuse Intel of playing dirty pool.
Dex4Sure profile picture
@Rand Walker Not true because AMD made their own chips back then. AMD and GlobalFoundries used to be the same company. GlobalFoundries were AMD's foundry business.
@jaws1 You nailed it. One big puke bowl of a mess for Intc. Their financial model is broken and their management leadership is a mess also and they are suppose to navigate this company out of its biggest change is decades??!! HAHAHAHA!!
INTC changing it's production model will be a big revenue driver, but a big hit on their Profit Margins. Time will tell how this affects their overall performance. As for AMD, they are now facing an awaken giant. Will be interesting how the engineering battle between them turns out, but at this time AMD stock is suffering from seriously over rated expectations. Of course, big winner is TSMC.
Value Growth Master profile picture
Doesn't look good for Intel moving forward.
Diesel profile picture
I can't believe how cheap TSMC stock was just a few weeks ago. It was blindingly cheap for so long even though the company is pretty much guaranteed to make money for years to come, pandemic or not.
Dex4Sure profile picture
@Diesel Yes it was cheap and it's still not overpriced at these levels.
secorewb profile picture
Last time AMD will ever order 200,000 wafers.
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