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Intel orders to boost TSMC’s revenue by billions of US dollars
12.01.2021 [08:11],
Alexey Razin

Now Intel receives more than 20% of its revenue from the sale of products that it does not produce on its own. In a week and a half, the company may announce a plan to place orders for the production of products using advanced technologies at the facilities of contractors. Analysts believe this will enable TSMC to increase revenue by billions of US dollars.

Image source: TSMC

The specifics of cooperation between Intel and TSMC have long been known: the first entrusts the second release of either secondary products of its own design using more mature technological processes, or solutions developed by Intel subsidiaries. The programmable matrices of the former Altera and the chips for the Mobileye autopilot systems are produced by TSMC, the parent company Intel is not at all embarrassed.

By 2023, everything could change, as various sources hinted more than once. Barron’s resource cites comments from Citigroup analysts, who believe that Intel will continue to trust TSMC to release simpler products at the first stage. For example, processors of the Atom class now bring Intel about 15% of revenue. If all their production is focused on the TSMC conveyor, the latter will receive an additional $ 2.5 billion in revenue.

In general, according to experts, if the release of some Intel processors on its own brought it $ 2 billion in revenue, then TSMC will receive about $ 560 million from transferring such a volume of orders to its conveyor. Migration of production of some products to TSMC conveyor will lead to a decrease in Intel’s profit margins by ten percentage points, and earnings per share will decrease by 25 percentage points, as experts expect from Citigroup.

It is noteworthy that they are convinced that Intel has no reason to completely abandon the production of processors in-house. First, the adaptation of a self-developed processor to someone else’s technical process can take a long time, and Intel would prefer to minimize these risks. Second, Intel would have to share intellectual property with a third party, which it would rather not do. Finally, in-house production allows you to control costs and maintain a higher profit margin. Intel CEO Robert Swan said in a recent interview that it was the presence of a manufacturing base that allowed the company to flexibly respond to changing market conditions in a pandemic – unlike many competitors, it was less dependent on third-party suppliers.