Apple’s Intel Chip Deal Won’t Deter TSMC’s Dominance, Says Bernstein

A recent report from Bernstein SocGen Group has clarified the implications of Apple's tentative agreement with Intel for chip fabrication, asserting that this move will not threaten TSMC's stronghold in the semiconductor market. The analysis arrives amid speculation about Apple's shift to Intel for its upcoming M7 and A21 chips, which are set for release in 2027 and 2028, respectively.

The report, authored by Bernstein analyst Mark Li, emphasizes that while Apple plans to use Intel's 18A-P process for its M7 chip, the deal involves relatively small volumes. Li notes that there are "no signs suggesting Intel narrowing the gap with TSMC technology," indicating that TSMC remains the most efficient choice for Apple in terms of cost and technological superiority.

TSMC's Technological Edge

Currently, TSMC is the only manufacturer capable of mass-producing what it defines as "true 2nm" chips, solidifying its position as a leader in advanced technology. In contrast, Intel's capabilities lag behind, and its 18A-P process is not expected to effectively compete with TSMC's offerings. Bernstein’s insights highlight that, despite ongoing improvements in Samsung's foundry technology, it still falls short in comparison to TSMC. For instance, Samsung's GAA 2nm node is functionally equivalent to TSMC's 3nm, emphasizing the gap between the two companies.

Li's analysis also suggests that while geopolitical factors may push some customers toward Samsung and Intel, this shift will likely be limited to older, more mature nodes instead of the advanced technologies that TSMC specializes in.

The Future of Apple's Chip Strategy

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Apple's exploration of Intel's manufacturing processes marks a significant development in its chip strategy, particularly as it assesses the potential of Intel's 18A-P process. The company has already acquired process development kit (PDK) samples from Intel, reflecting a proactive stance in evaluating this collaboration. Additionally, Apple's upcoming ASIC, named Baltra and expected to launch alongside the M7 and A21 chips, is anticipated to utilize Intel's EMIB packaging technology.

Capacity Expansion at TSMC

In response to these developments, TSMC is actively expanding its operations. The company is currently constructing 12 different fabs to strengthen its leadership in both the 2nm and the upcoming A14 (1.4nm) nodes. This extensive construction initiative demonstrates TSMC's commitment to maintaining its competitive edge in a rapidly changing industry, where innovation and capacity are essential.

While Apple’s potential partnership with Intel might appear significant, the Bernstein report suggests that TSMC is likely to remain the primary supplier for Apple’s advanced chips due to its unmatched technology and production capabilities. As the semiconductor industry evolves, TSMC's proactive strategies and technological advancements are poised to reinforce its leadership position in the market.