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

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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.