Wells Fargo: TSMC news a ‘qualitatively positive Apple data point’

Apple and Huawei were the first to snap up TSMC’s 7nm chips, which are ramping faster.

From a note to clients by analyst Aaron Rakers that landed on my desktop Thursday:

The Apple Derivative Call (Positive Qualitative Commentary; Low Historical Correlation): We would expect investors to gauge TSMC’s 7nm ramp as a qualitatively positive Apple data point. Implied 7nm revenue ramping slightly faster than 10nm. Additionally, TSMC’s communications segment revenue grew 24% q/q vs. +14% q/q in 3Q17; albeit up only 2% y/y; however, we note that we would find a somewhat low historical correlation between TSMC’s communications segment revenue and Apple’s results (R2 at <50%). Bloomberg reports that Apple accounts for ~15%-20% of TSMC’s total revenue…

TSMC reported 7nm revenue at $933 million, or equating to approximately 11% of total wafer revenue. TSMC commenced 7nm production in 2Q18, which accounted for less than 1% of total wafer revenue in the June quarter. [See chart]

TSMC 7nm

Click to enlarge.

My take: Intel failure to deliver what it calls its “next generation” 10nm chip looks worse and worse. The poor suffering MacBook.

Who else besides Apple is rolling its own SoCs (system-on-a-chip)? Counterpoint on Tuesday posted an up-to-date backgrounder. See The Rise of In-House Application Processor Design.

5 Comments

  1. Fred Stein said:

    Huawei recently overtook Apple for second place in Smartphone units sales. But Apple is still the first 7nm customer at TSMC, Huawei right behind. Two points:

    Huawei is a fierce competitor and long-range thinker. From a pure spec and feature perspective they’re competitive, especially outside the US.. But iOS loyalty provides a powerful moat.

    The whole silicon story is much bigger than folks realize. Apple’s decision to invest in chip design (not manufacturing) is capital efficient. And yet, they’re first to market with the best chip designs and chip fab – by a large margin. This is due to Tim Cook’s genius. Maybe Huawei can narrow the gap in design. I don’t see anyone catching TSMC.

    1
    October 18, 2018
    • Gregg Thurman said:

      I don’t see anyone catching TSMC. in the near future.

      0

      October 18, 2018
  2. David Emery said:

    Anyone else remember when Motorola couldn’t deliver new PowerPC chips (and what happened next?)

    0
    October 18, 2018
    • Gregg Thurman said:

      Yep. I thought moving to Intel was the best thing that had happened to the Mac since forever. Gone were the arguments about which processor (Intel or Motorola) was the best. The argument became which OS was the best, and MacOS was built on Unix.

      Further, developers could more easily port their Windows products to the Mac, increasing the availability of Mac titles dramatically.

      In today’s context, I think you are alluding to the possibility of A-Series silicon powering Macs. At some point, I think that would be wonderful and will happen. I just don’t know if the A-Series will be robust enough (in the near term) to satisfy the really heavy lifters out there.

      1
      October 19, 2018
      • David Emery said:

        PowerPC was a better instruction set architecture than x86. The problem was with Motorola’s chip design and manufacturing.

        0
        October 19, 2018

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