Analyst: TSMC to take 'bite of apple'

SAN JOSE, Calif. - Silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) is taking a “bigger bite of the apple,'' according to an analyst.

''Rumblings about Apple’s decision to shift A5 processor orders to TSMC from Samsung have gathered steam,'' said Steven Pelayo, an analyst with HSBC, in a new report. ''While unconfirmed, we believe cooperation is inevitable considering TSMC’s capacity and technological advantages, as well as a lack of potential interest conflicts.''

If TSMC did indeed receive the business from Apple, ''the results show minimal incremental revenue contribution (for TSMC) of approximately 1 percent (and) 2.5 percent of 2011 (and) 2012 consensus numbers,'' respectively, he said.  

''In prior reports, we noted TSMC was less exposed to 'Round 1' of the tablet wars as Samsung captured much of Apple’s silicon opportunity. We always expected TSMC to benefit more in 'Round 2' with non-iPad products, but now it appears the company is potentially poised to take a 'bigger bite of the apple,' '' he said.

In the report, HSBC attempted to quantify the incremental revenues to TSMC if A5 processor orders are shifted from Samsung.

''We assume a die size of 60mm² for the dual-core A5 on 40/45-nm and estimate that approximately 1,035 units can fit on a 300-mm wafer. Assuming an 85 percent in 2011 and 90 percent yield in 2012 (as the process node matures), we expect net die per wafer to be around 880 and 932 in 2011 and 2012 respectively,'' the analyst said.

''We estimate total Apple iPhone/iPad shipments of 130 million units this year, with 90 million units fitted with the newer A5 processor. We expect the A5 to be integrated into iPhone soon, so by 2012 we forecast the A5 opportunity to increase by > 150 percent to 230 million,'' he said.

''Assuming TSMC gets 30 percent of Apple’s orders this year (with Samsung the remaining 70 percent) at an average wafer ASP of $4,000, the incremental revenues are only around 0.8 percent of its 2011 consensus revenues numbers. In 2012, the contribution should rise to 2.5 percent assuming it gets 60 percent of the A5 orders at a lower ASP of $3,000,'' he added.