The semiconductor industry is undergoing profound changes with the rise of a previously unknown player.
When AMD decided to separate its design and manufacturing operations in 2008, many experts predicted the brand would simply disappear. Today, GlobalFoundries is a thriving foundry and AMD's success in designing CPUs and GPUs is clearly evident: it was the company that was chosen - twice, please - by Microsoft and Sony for their eighth- and ninth-generation consoles.
Since the Covid-19 pandemic and the explosion in demand for semiconductors, the principle of sharing design and production has been put to the test... at least in theory. Production companies are indeed criticized for not being strong enough to keep up with designers' innovations, and it must be admitted that shortages of all kinds now affecting even the automotive industry rather argue in favor of this observation. At least on the theoretical level, we say, because economically, the story is quite different.
The world's largest independent foundry - the Taiwan Semiconductor Manufacturing Company, better known by its acronym TSMC - has nothing to complain about in the current situation. First of all, it has a huge number of customers and has such prestigious companies as Apple, AMD and NVIDIA in its portfolio. Even the giant Intel calls on it for some of its components because, despite its enormous production capacity, it is simply not able to keep up. You will tell me that TSMC is not able to keep up either and the shortages of AMD / NVIDIA graphics cards are there to prove it.
However, TSMC is having its best years. Proof of the confidence of its leaders, they even announced recently a substantial increase (+3%) in the prices charged to Apple, its main customer. All in all, the investment banks believe that TSMC will continue to grow and the $100 billion revenue mark is not far off: in 2025 for JP Morgan Chase and even as early as 2024 according to Citigroup. A performance that would be accompanied by a very clear increase in its operating margin.
Intel remains a more important company than TSMC, but the Taiwanese company's growth rate raises the question of whether Intel will catch up, as its revenues are growing at a much slower pace (though still +8% last year). In 2020, at $48 billion in revenues, TSMC represented the equivalent of 60% of Intel's profits ($78 billion). In 2025, at 100 billion in revenues, TSMC could represent 80% of Intel's earnings according to quick calculations by WCCFTech.
