Going through some of the equity research notes, apart from the contents, one of the things that struck me the other day was the brief succinct way the main content is put out. And so, I thought, why not do a series with my take on some of the stakeholder companies and application markets in the semiconductor eco-system. Appreciate your feedback, comments, thanks!
So here goes the first one…
• Intel’s technology lead
- Pros: Increased capex to maintain the lead (at least 2.5 years ahead from competition), Intel’s stake in ASML for 450mm and EUV R&D
- Cons: The increased capex that could also result into high end fabs running under capacity. Intel needs to monetize its leading edge technology and also needs numbers and breadth of various types of chips to be fabricated in its fabs in order to fine tune its processes.
- As per IC Insights, Intel’s forecasted capex for period 2010-2013 is $40b, second to Samsung’s ($46.9b) – together to account for 42% of the total industry
• Intel’s foundry principle seems to be - Open Intel fabs for non-Intel chips but not for competing chips (“chips for mobile biz”). Altera deal is seen as step forward. However, point to be noted is that while (reportedly) this deal does not allow Intel to let other FPGA vendors (Xilinx?) on its 14nm fabs, Altera can still continue to work with TSMC and others. Second source foundry options may not reel in 100% of Altera’s total fab requirements to Intel
• Semiconductor growth drivers and Intel’s market share in it
- Slowing down/Cannibalizing of PC biz (Intel’s main revenue generator)
- Mobile chips being the major driver now for semiconductor growth and Intel’s not too effective efforts till date in this space.
• However lately, we are seeing Intel making good in-roads in this space. Mobile biz requires connectivity plus good power management solutions besides the performance factor. Two announcements from Intel this year point positively in this direction – Dialog deal (for power management in its Bay Trail (22nm)) and XMM7160 (multimode, multiband 4G LTE global modem solution) for an integrated SoC solution end 2013/early 2014.