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Analysts do not believe in Intel’s ability to compete on equal terms with TSMC
Intel CEO Patrick Gelsinger today outlined the company’s intentions to become a major contract manufacturer using advanced process technology to manufacture third-party chips. This initiative did not frighten not only representatives of the Taiwanese government, but also some industry analysts. TSMC’s leadership, according to the first, is not in danger.
Image source: Reuters
It must be admitted that the TSMC share price after the speech of the head of Intel fell by 3.9%, so it cannot be argued that the market did not perceive the threat from the American manufacturer at all. Recall that TSMC has committed itself to build an enterprise in Arizona by 2024, which will produce 5-nm components. The Taiwanese company now intends to outstrip not only Samsung Electronics with its Texas project, but also Intel, which will build two new factories in Arizona by 2024, which will be able to serve third-party customers.
According to Reuters, the Minister of Economy of Taiwan Wang Mei-hua has already stated that Intel’s initiative with its second attempt to enter the contract manufacturing market in its history does not pose significant threats to the island’s economy. First, Taiwan’s semiconductor ecosystem as a whole is doing well, the official said. Second, she said, Taiwanese manufacturers are constantly improving their technology. The Minister welcomes any initiatives for cooperation with the United States and hopes to increase investment in the national semiconductor industry.
Experts also disagreed in their assessments of this Intel initiative. Representatives of Fubon Securities Investment Services recalled that Intel’s previous attempt to become a contract manufacturer was not particularly successful: it eventually bought Altera, and the production of LG mobile processors was never established at Intel’s facilities. In the current plan of the corporation, according to analysts, there is nothing new. According to them, Gelsinger is living in a bygone era, and it will be extremely difficult for Intel to catch up with TSMC in manufacturing capabilities.
Raymond James Experts Express Different Concerns — In Their View, It Will Be Difficult For Intel To Get Customers For Contract Manufacturing Of Components. Intel’s lag in technology from competitors is still too large to motivate customers to renegotiate their contracts with rivals of this company. Bloomberg Intelligence analysts do not believe that Intel will be able to lure Apple and Qualcomm into its pipeline, since all three companies are competing with each other. Again, Mega International Investment Services are convinced that as soon as Intel’s new ventures begin delivering products to customers, TSMC will immediately feel the competitive pressures. Meanwhile, the nearly 7% rise in Intel shares in preliminary trading today gave way to a 5% rise.