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False. Not even close to reality.
www.tsmc.com/uploadfile/ir/quarterly/2013/3dgdC/E/FS.pdf
Qualcomm is expected to have their 9x35 modem shipping in volume this year on 20nm
www.fudzilla.com/home/item/33656-qualcomm-to-have-20nm-chips-later-this-year
If I had to guess, this is most likely going into the new iPhones in the Fall. It's not a stretch to think that perhaps Apple has their new apps processor (A8) in the high volume 20nm TSMC process this year.
I haven't seen any evidence they (TSM) are failing on their plans or any indication they are in trouble.
But then again TSMC is growing which is a negative on free cash flow. Their CapEx is greater than Intels. Despite that they still seem okay as far as I can see.
Given that TSMC'S net margins are 32% vs. Intel's 22%, I wouldn't say it's a problem. You need to ask where Intel is spending money OTHER than capex... And I've already given you the answer. While TSMC spends 500M/q on SG&A, Intel spends almost $5B/q.
I.e. it costs Intel 10x as much as TSMC to just run its business and maintain that bleeding edge process.
TSMC's spending is focused on capacity and they're perfectly happy to allow Intel to spend billions to hack through the process jungle while it follows comfortably just behind. THIS IS A FEATURE, NOT A BUG. It's their whole business model.
TSMC can concentrate a much larger percentage of its spending directly on expanding capacity than Intel, while still spending LESS overall than Intel as a percentage of revenues.
Meanwhile, Intel just shuttered their big new fab shell in Chandler, worth nearly a couple $B... Yesterday, was it?
Don't buy the BS line that TSMC's sky is falling, the main proponent of which seems to rely entirely upon Intel-sourced statements and predictions.
Semiconductor Ecosystem!
Daniel Nenni 07-07-2013
Intel Wafer Pricing Exposed!
Intel doesn't but TSMC is suppose to be ramping 20nm quickly starting about now (Q1). Wouldn't 20nm from TSMC lose a lot less money and be a more desirable chip?......Wouldn't it be pretty dam small as well at 20 nm? Why not port it to 20nm? If the port to 28nm is ready, why not start fabbing them now? Maybe a 20nm TSMC Sofia port would kill 22nm Intel Baytrail/Merrifield all together. How ironic would that be???
Perhaps you could provide some pointer for what you say about TSMC? How about a link to where Morris Chang said anything like that?
According to marketwatch.com:
A) As of 9/30/13, TSM cash=217B TWM = $7.16B USD; INTC cash = $4.88B USD
B) Net Operating Cash Flow: as of 9/30/13, TSM = +$98B TWM = +$3.23B USD, INTC = +$5.7B USD
C) AGAIN with the BS gross margin... I said NET margin. TSMC keeps more of every dollar of revenue it gets than Intel does.
I don't see anyone else promoting your TSMC's-sky-is-falling thesis.
TSMC has more cash than Intel, better net margin than Intel, growing net income (vs. Intel's falling net income), far less debt...
I don't see the sky falling for TSMC like you seem to.
As for TSMC merely "making it to 2015"? Again... Don't see a problem.
Because as you believe they're paying out more in dividend than they're earning and so will suddenly go poof?
Since he is a regular contributor with a pretty big position in Intel, I would have liked to see his thoughts on Intel's price action today.
.....so up to and including 22nm, Intel mobile chips were not better performing (lesser in aggregate) or significantly less expensive ( actually quite a bit more expensive). Your entire thesis depends on both flipping at 14nm....and by a very large amount. Correct?
Well, if you were told that it must be true
How does this not strike fear into the hearts of Intel fans who are adamant that margins aren't being threatened by mobile?
Note that R&D is not depreciated but expensed in the year it is spent. Intel appears to be depreciating new fab capital in about 3 years or so. I expect 2014 depreciation guidance to be substantially higher at about $8.4B, which will be reflected in their GM guidance. They go from about $1.7B/quarter to $2.1B/quarter, or an increase of about 23% when moving to 14nm. We will see actual guidance on Thursday and see how close this is. If revenue stays about flat, an increase in depreciation of around 23% could impact gm by about 8% or so.
Alan
Walbert there is a QUOTE function you can use, to save you using square brackets. ;p
"In economics the question is whether people will buy it. And the answer is quite clearly yes as TSMC already has a whole pile of customers lined up for 16nm in 2015."
[Once again, you are missing the point. The point is that even if they make it and even if they sell it to the ARM shops, the ARM shops then have to try to market against better performing, significantly less expensive Intel-based products. Sure, the ARM shops will have to buy it, but the increased costs still have to work they way up the food chain to the consumers. And consumers will have better choices.
TSMC still has to make it, still has to make it in volume and still has to make it to 2015. None of these are assured.]
"I really doubt there is anything Intel can do that others can't match, the main question is how quickly they can do it, i.e. when not if. If TSMC really do deliver on 10nm at double the density compared to 16nm with risk production in 2016 and volume in 2017 like they seem to be saying are we really certain it won't be economic?"
[The ARM foundries don't have three years to get their act together. They are being crushed by their CapEx needs now and have been for years. TSMC's dividends have exceeded their free cash flow for all of the last four years.]
"Quote: The four CPU cores and the eight GPU cores in the HSA-enabled Kaveri processor can each run its own thread, drawing data from a shared memory space. Kaveri, Macri explained, should therefore be regarded as a 12-core processor."
[Well, what abut Nvidia?
From anandtech:
"Tegra K1 features a single SMX (in a single GPC), which amounts to 192 CUDA cores. NVIDIA made the rookie mistake of calling Tegra K1 a 192-core processor, which made for some great headlines but largely does the industry a disservice."]
Intel May Introduce First “Broadwell” Chips in Q3 – Report.
Intel’s Next “Broadwell” Processors May Emerge Earlier Than Expected
http://www.xbitlabs.com/news/cpu/display/20140113225621_Intel_May_Introduce_First_Broadwell_Chips_in_Q3_Report.html
Excerpt:
"When Intel Corp. last quarter said that it would delay mass production of the next-generation code-named Broadwell microprocessors, it was expected that the new chips will become available only in late 2014. However, a new piece of information indicates that the world’s largest chipmaker may start to roll-out Broadwell chips as early as in the third quarter of 2014."
"Intel's 14nm fab expenses haven't even started depreciating yet..."
[And yet Intel has already said that they can maintain margins going forward. Intel can spend like drunken sailors on fabrication, pay a dividend, spend billions on R&D, invest in 450mm technology, generate incredible capacity and still fit all of this within their free cash flow with no real problem.
They can do this AND stay on the Moore's Law curve. ARM can't do any of this. They don't have the economics or the funding. With new nodes costing them more and not less, their fabrication model is totally broken.
It's all about the economics going forward.]
"But Windows 9 x86 will be more Desktop-oriented and professional oriented. Which means all this Venue 8 pro, Toshiba Encore, Acer W4 (cheap 8-inch Baytrail tablets) won't be a Microsoft-focused market."
[Intel has saved Microsoft's rear end in tablets. For them to do something to undercut this miracle, like make the next version of Windows desktop-focused, would be insane. I don't see even Microsoft being that blind. RT was a desperate, failed bid to get into tablets. Intel is all Microsoft really has now.
Microsoft is trying to solve the problem of all of the desktops being converted to tablets. You are saying they are going to forget this. I don't see it.]
"Seeing how they have already started risk production I believe they're quite happy about 16nm volume in 2015. Samsung seem to be too though they say even less."
[You missed the point entirely. The point was about the economics at the next two nodes. Even when they arrive (and this "risk production" means nothing), they economics on each node will be significantly flawed and instead of costs going down, they will stay flat or even go up. This will be the first time this has happened and it's a disaster.]
"10nm certainly is rather more problematic, I can't see them doing risk production till 2016 so that would mean volume in 2017 at best for them. You never can really tell what is happening inside companies about things like this though that far ahead."
[I see no reason to be concerned with ARM's 10nm node. It will all be over but the crying and shouting by then.]
"As to the whole fab business collapsing like you seem to think - I really don't see that happening. The most that will happen is there will be a couple more mergers and the prices will go up a bit but not so much as to cause any major problems. The thing I see being talked about more is how locked in are the SoC vendors to a particular fab, should they be more locked in to get better performance or less so as that means they can move around easier."
[A couple more mergers? Are you serious? There are only two players at the top level - Samsung and TSMC. If they merge (it'll never happen) then ARM shops would have NO choice in manufacturing. And you suggest that prices will go up a bit. Once again the problem is the prices going up. It's all about the economics. ARM's fabrication economics is a problem that can't be solved.]
"I just don't see the market turning on a dime any more, and I'm less confident that it's as simple as Intel just leveraging their manufacturing and design prowess. It might take years, or it might never happen."
[I think that you are ignoring the economic situation that will be extremely critical in the next few years. Bottom line is that the economics of the ARM foundries appear ready to crash and burn.
TSMC's dividends have exceeded their free cash flow for all of the last four years. This is a situation that cannot be perpetuated. Taken as a whole, the ARM foundries are investing a level of CapEx that as a percentage of sales cannot be supported in anything other than the very short term. They are having to make huge investments in an attempt to get to 20nm and then FinFET. Literally company-crushing levels of investments. A big problem in and of itself but those investments aren't getting them any improvements in economics. They aren't even staying flat.
Intel on the other hand is spending much, much less as a percentage of sales, can easily manage it's CapEx needs and is getting improved economics at each new node and is managing to maintain margins at the same time. It's doing this by taking leadership in density.
I don't see how TSMC even gets the half-step to FinFET much less to 10nm without changing its business model or eliminating its dividends.
In short, it's too little, too late and there is nothing the ARM world can do to close the gap. Intel is going to continue to pull away while the ARM foundries move slower and slower with their cash constraints.
I've heard people suggest that Apple or Qualcomm will simply jump in and throw money at the foundries but if that were seriously suggested you would see Apple and Qualcomm shareholders turning over furniture and lighting cars on fire. They adopted the fabless model specifically to get rid of these costs.
ARM's fabrication is a train wreck and in the next few years it is going to be obvious to everyone. The fabless model has sucked all of the funding for R&D and building fabs out of the foundries. This is why the number of state-of-the-art fabs has shrunk consistently and now is really down to Samsung and TSMC, with TSMC likely to drop to tier 2 status in the near future. There isn't the time, money or technology to reverse this trend. Intel can accelerate this trend by taking the top paying customers away from TSMC.
I don't see any way that the economics don't play out decidedly in Intel's favor in the next few years. From here on out I think it is as simple as Intel just leveraging their manufacturing and design prowess, their superior economics and their huge capacity.]
"I hate to be the bearer of good news in these days of board gloom and doom.."
[LOL. Indeed.
Board capitulation seems to be the change in sentiment needed to move the stock higher.
All of the major dynamics seem to favor Intel. I guess we'll see on Thursday. I expect a modest beat, BK's second in a row and then 4 more in a row as 2014 comes together with an improved economy and roll out of volume 14nm FinFET production.]
"One feature that I have enjoyed with the Dell Venue 8 Pro tablet with full blown Windows has been the ease of joining my Windows HomeGroup network with one-click. Now my libraries of pictures, videos and music are accessible on my tablet for emailing, viewing etc. without transferring or uploading to the cloud. In addition all of the storage on my home network is available to the tablets for automatic backup etc.
There are probably other ways to accomplish this but for a life long Windows user this was a no-brainer and didn't require anything extra to achieve."
[Indeed, compatibility across all devices is a highly desirable feature for these types of reasons.]
"I don't really understand why Intel is doing this, could someone explain what is happening a bit better thanks?"
[It's a stopgap. It will be transitioned to Intel. Intel has some inherited ARM designs.]
"For the smaller ones (i.e. the ones that will be selling in high volume), then nobody gives a hoot."
[Another opinion supported by absolutely nothing.]
"LOL, now we have ARM chips that are too powerful for the mass market... "
[The CPU isn't too powerful. It's run of the mill.
Here's what Anandtech said about it:
"The CPU side, at least for the Cortex A15 version is less interesting to me."]
"BTW, What exactly does someone need full-blown Windows on a tablet for?"
[I can't believe that you need to ask this after the RT debacle.]
"Intel understands graphics is important and serious, but they're not moving fast enough to be competitive with the ARMy."
[Their consistent gains over time indicate that this is not true. They are not competitive at the highest-end but this has never been a goal. Nor does it need to be now. There are bigger fish to fry.]
"Intel's track record isn't great and yet we all think they'll pull through this time."
[This isn't about Intel's track record. This is about you taking Nvidia's word on shipments of K1 as gospel with your eyes glazed over.]
"Companies, like people, learn and adapt. NVIDIA is on time and on target with Logan, so they deserve props. If Intel pulls in Cherry Trail, they'll deserve props, too."
[They haven't shipped anything yet! LOL. So your assurance that everything is on time is meaningless. They do not deserve credibility if they have missed deliveries in the past. That's just basic common sense.]
"Designs will be announced in Q1 for Q2 shipment."
[Yeah, like Nvidia has never had a shipping delay.]
"Equally fast CPU, much faster GPU. More desirable part."
[Anandtech wasn't that excited about it. And the market hasn't been either. ]
"Erm, Intel seems to think advancing GPU performance is important..."
[Yeah, they think their current pace is fine. You just got through saying that they should drop everything and do an Nvidia like effort on graphics. So, you say it's a focus for them and then you say it's not enough of a focus for them. You sound confused.]
"Are you, as an investor, content wit "slow and steady" progress as the PC market proves to be uninspiring at best?"
[I think Intel has made steady progress in graphics and in taking market share from both AMD and Nvidia. I don't see putting more effort into this area should be their top priority. Apparently you do.]
"Funny how Intel never emphasized this...telling everybody they had a "lead" at 22nm over 28nm. They did in transistor performance, but as I tried to point out to you, mas, and semi_equip_junkie over at Yahoo well beforehand, Intel had pretty comparatively poor density at 22nm and that 20nm would be much denser."
[They covered this in some detail on Investor's Day. You don't remember? They said they simply had no need for improved density at 22nm. Now they do and they are seizing leadership in density.
It's that simple.]
"How much money is Intel going to make selling a Quark module?"
[You could have said the exact same thing about the smartphone market a few years ago.
I don't think you have taken the time to project the IoT market. We are talking about 50 billion connected devices by 2020. So, it's not the unit increment that is important. It's the incredible volume.
But the real money for Intel is on the server side. The IoT will require a network equal in size to the existing cellphone network. If the existing cellphone network was suddenly doubled do you think Intel's revenues would go up?
Intel got hammered for having missed the mobility market. Now you are saying let's have them miss the IoT market too!
The IoT market is going to dwarf smartphones and for that reason it is where Intel should be focusing. So, yeah - it's all about the baby monitors, baby.]
"NVIDIA is the world leader in power efficient GPUs, so I have every inclination to believe them. If they didn't have the GPU experience that they did, it'd probably be prudent to call BS."
[So, you are not going to let the significant number of times that Nvidia has over-promised in a reference design and under-delivered in the shipped product in the past stop you from drinking the Kool-Aid.
It's not about the GPU experience, it's about the track record.]
"But the point still stands: Intel is busy goofing off by "giving away" under-powered Bay Trails while the rest of the SoC world is iterating next generation parts."
[Goofing off. Giving away.
This isn't analysis, it's character assassination stated as a cheap shot. These comments have more to do with your emotions than with the situation.
Just a very short time ago you were saying how great your Dell Venue Pro was. Now it's an under-powered Bay Trail that Intel is giving away. The K1 isn't even shipping and by the time it does Intel will have newer more competitive products. You are comparing Intel's current products with Nvidia's future products. How objective is that?
There is nothing in particular about the Tegra K1 that will impact Intel. It doesn't have broad application. It's a niche product competing in an area where Intel is quite content with its slow but steady progress. I totally disagree that this is the kind of thing Intel should be focusing on. All of computing is preparing to move to the next level and this has little to do with it.
Because you are a gamer you seem to think that all of Intel's efforts should be in the sphere. ]
"Actually, if you look at Stacy Smith's slide deck at the last analyst meeting you'll see that TSMC 28nm density is comparable to Intel 22nm."
[Those days are over. As Intel moves to 14 and 10nm they will have leadership in density. This was covered extensively on Investor's Day.]
"NVIDIA demonstrated a 7" Logan-based tablet at CES running Serious Sam 3 while Intel was busy showing off its pathetic baby monitor BS."
[Now that's funny. You rate the entire world's interests by your own. I can't imagine why you think running Serious Sam on a 7 inch tablet is a big deal. No one wants to run a high-end game on a 7 inch tablet.
The baby monitor was just one example of the potential of the technology. Are you really such a liner thinker that you couldn't imagine other uses for the technology?
And just because you are more into playing games than having babies doesn't mean everyone is. I have a friend who is a nanny in NY and you can't imagine how much money some people spent on their infants.
I thought your comment was a cheap shot and not very thoughtful at the same time. It's the kind of thing any teenage boy would say. I wouldn't necessarily let a teenage boy do my evaluations on Intel's future.]