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Tech War: TSMC v. INTEL, MediaTek v. Qualcomm, Richtek v. TI

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Tech War: TSMC v. INTEL, MediaTek v. Qualcomm, Richtek v. TI

Postby Martin Su » Mon Oct 12, 2015 12:26 am

The most surprising aspect of the current tech war in the semiconductor industry is that the competitors are Taiwan (david) and the United States (goliath).

Let's start with TSMC vs. INTEL.

INTEL is the expert at CISC processors. They own the x86 market. INTEl has revenues around $50 billion and net income about $10 billion per year.

TSMC is the expert at RISC processors. They own the ARM-based SoC manufacturing market for smartphones. TSMC has a 30-year library to facilitate the design of RISC chips. TSMC has revenues around $25 billion and net income about $10 billion per year.

The TSMC vs. INTEL battle will occur on neutral ground. The question is which company has better semiconductor technology. The contest will be fought over the first-to-market in leading edge 14/16nm FPGA technology.

FPGA is neither CISC nor RISC. It is a reasonable measuring stick to compare TSMC and INTEL technological expertise.

It has been two years and eight months. There is still no release date for INTEL's manufacture of Altera's 14nm FPGA.

In February 2013, Altera and INTEL announced that INTEL will manufacture Altera's 14nm FPGA.

Source (Altera): http://newsroom.altera.com/press-releas ... eement.htm

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Two years and eight months later, we are still waiting for news of the Altera 14nm tapeout by INTEL.

Source (Benzinga): http://www.benzinga.com/analyst-ratings ... nx-but-why

"The analysts commented that the delays for Altera posed as bad news for Altera, Intel and Xilinx.

In the report, Citi noted, 'Our checks indicate Altera's 14nm tapeout at Intel has been pushed out again from 2Q15 to 2H15....'
...
We believe the additional setback could put Intel's foundry effort 'back to the drawing board' due to the extensive delays scaring away potential customers."

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It takes one year from tapeout to mass manufacture. This means the Altera 14nm FPGA is MIA (missing in action) until the second half of 2016. This assumes there are no further delays by INTEL. Given the repeated INTEL delays, it indicates INTEL is struggling to manufacture a leading-edge node FPGA. Further delays cannot be ruled out.
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On the other hand, Xilinx is already shipping TSMC-manufactured 16nm FinFET FPGA. INTEL/Altera will be late to market by at least a year. Game Over. TSMC and Xilinx win hands down.

Source (Electronics Weekly): http://www.electronicsweekly.com/news/p ... a-2015-10/

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Martin Su
 
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Re: Tech War: TSMC v. INTEL, MediaTek v. Qualcomm, Richtek v

Postby Martin Su » Tue Oct 13, 2015 7:38 am

Understanding INTEL's perplexing billion-dollar moves.

Let's finish the TSMC-INTEL rivalry story.

On the surface, INTEL had made two very expensive and hard-to-understand billion-dollar moves.

Source (Bloomberg, January 2015 article): Intel $4.21 Billion Mobile Loss Would Have Sunk Most Rivals - Bloomberg Business

Firstly, INTEL loses $4 billion per year in the mobile sector. An obvious question is why doesn't INTEL cut its losses and close down the mobile division with the huge losses? To answer the question, we have to look to history.

INTEL willingly incurred huge losses via its joint-advertisement program ("INTEL Inside") with computer manufacturers to drive AMD to the brink of bankruptcy. This tactic was brilliantly successful against a much smaller AMD. However, TSMC is an extremely profitable company with billions of dollars in net income. History will not repeat itself. There will be no INTEL victory.

Nevertheless, INTEL's willingness to incur $4 billion in annual losses still makes sense. Think of the competition between INTEL and TSMC as a chess game. INTEL is spending $4 billion per year to deny $4 billion in sales to its opponent TSMC. INTEL is using its massive cash flow to suppress TSMC's revenues and net income. This is a denial strategy.

Source (The Wall Street Journal, June 2015 article): Intel Agrees to Buy Altera for $16.7 Billion - WSJ

Secondly, INTEL spent $16.7 billion in cash to buy Altera. Now, why would INTEL do that? Altera's primary business is FPGA. It does not fit INTEL's core businesses of x86 microchips, servers, and other divisions. Though we cannot see the confidential contract between INTEL and Altera for the production of 14nm FPGAs, it stands to reason that INTEL might have to pay substantial penalties to Altera for being at least two years late.

Almost three years ago, Altera boasted about signing a contract with INTEL to produce leading-edge 14nm FPGAs. INTEL can't deliver. They are already one year late. Since a tape-out has been pushed back to the second half of this year (and we can't rule out a further delay), INTEL will be at least two years behind schedule in manufacturing Altera's 14nm FPGA. Due to INTEL's delays, Xilinx will garner most of the market share for 14nm/16nm FPGAs at Altera's expense.

There is a high probability that INTEL had to compensate Altera for the excessive delays in manufacturing Altera's 14nm FPGA. Thus, it was probably cheaper for INTEL to buy out Altera instead of paying a huge sum in penalties.

In conclusion, INTEL's foray into mobile has been a disaster. It's draining billions of dollars out of INTEL and has no apparent effect on TSMC. TSMC's worldwide market share of the foundry market has climbed from 48% to 54%. Since TSMC's growth is outpacing the industry, TSMC's worldwide market share is expected to reach 60% in the next few years. Also, INTEL spent $16.7 in cash to buy Altera. Furthermore, INTEL will have to devote time and energy to integrate Altera into the INTEL organization. Time is running out. Xilinx is crushing Altera, which is now part of INTEL. Xilinx has already announced 7nm FPGAs for 2017. INTEL is about to see some huge losses coming out of Altera in the future. INTEL better get moving.

One final thing. This year, TSMC's capital expenditure has exceeded INTEL's for the first time. We have reached a tipping point. TSMC keeps growing, but INTEL stays stagnant. TSMC's net income could exceed INTEL's as early as next year.

Source (EE Times): TSMC Overtakes Intel in Chip Capex Ranking | EE Times
Martin Su
 
Posts: 2040
Joined: Wed Oct 30, 2013 7:17 pm


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