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August 21, 2017

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TSMC to get Apple orders in 2014: UBS

Taiwan Semiconductor Manufacturing Co. (TSMC) is expected to get processor orders from Apple in 2014, after the company enters 20-nanometer manufacturing, predicted institutional investor UBS yesterday.

According to UBS, increasing smartphone penetration rate will translate into more orders for upstream semiconductor companies. Also, with Apple and Samsung engaged in fierce competition, Taiwan manufacturers are expected to get more orders from Apple, it said.

"The battle between Apple and Samsung is anticipated to benefit Taiwan's contract chip-makers, testing and packaging operators, as well as print circuit board manufacturers," UBS said. "We expect TSMC to get processor orders from Apple once it enters 20nm manufacturing, which is set to be 2014."

Barclays Capital meanwhile offered a similar view, saying most of TSMC's major clients are still taking a wait-and-see attitude in the lead-up to 20nm manufacturing, and Apple will play a more proactive role in pushing TSMC to 20nm than other clients.

Separately, TSMC's move to raise capital expenditure has caused concerns among investors. However, UBS dismissed those concerns, saying the spending increase is unlikely to result in an oversupply, given rising cost of advanced manufacturing equipment.

Barclays Capital meanwhile said TSMC's spending on 20nm has grown at a rate of 40 to 50 percent, lower than that for 28nm manufacturing. This is expected to narrow TSMC's depreciation cost between 2014 and 2016 and is positive for TSMC's operation.

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