Northland Capital has upgraded AMD’s stock from Market Perform to Outperform with a target price of $96. Calling Intel’s decision to re-commit to its foundry business a “strategic faux pas”, analyst Gus Richard believes that this decision will cost the company on both ends. Stating that Intel won’t be overtaking TSMC in terms of process leadership anytime soon which makes sense given that the newly announced 7nm foundries will only start operating from 2023, with an estimated push to full capacity by 2024. TSMC on the other hand is already on its way to start the risk production of its 3nm node by the year’s end.
The Taiwanese foundry plans to start mass production of 3nm chips next year, with the first devices from Apple expected to ship by the end of 2022. TSMC’s 5nm EUV node is comparable to Intel’s 7nm process with the 3nm node set to compete against the latter’s 5nm. Looking at the present timeline, TSMC’s 5nm node will be available to all major chipmakers including AMD and NVIDIA by the end of the year, while Intel is only just going to start shipping processors based on its 10nm node by then.
Fast forward to 2023 and you’ll have NVIDIA, AMD, Qualcomm, and Apple all leveraging TSMC’s 3nm node with Intel just starting the mass production of its 7nm-grade chips. You can see where this is going. It’s highly unlikely that Intel will retake the process leadership from TSMC in the foreseeable future.
Since AMD outsources all of its chips to TSMC, this makes Intel a short-term partner, “persona non grata” as Richard calls it, making it a secondary customer in an already competitive foundry business.