TSM capex 36 billion, Intel 26 billion

[Arthur Hanson]

In a contest where capex rules, TSM is clearly winning the race with 36 billion versus 26 billion for Intel. Not only that, TSM's costs are lower than Intel's further increasing the gap between the two. Doing business in the US is more expensive than Taiwan. It looks like TSM will keep increasing the gap between the two as it has been doing for years. Any thoughts or comments on this sought and appreciated.

Samsung is planning on a capex of over 200 billion, but no details on what products or time frame.

 

[delong.height]

In a contest where capex rules, TSM is clearly winning the race with 36 billion versus 26 billion for Intel. Not only that, TSM's costs are lower than Intel's further increasing the gap between the two. Doing business in the US is more expensive than Taiwan. It looks like TSM will keep increasing the gap between the two as it has been doing for years. Any thoughts or comments on this sought and appreciated.

Samsung is planning on a capex of over 200 billion, but no details on what products or time frame.

26 billion is just a fraction of the overall CapEx commitment Intel is making. Don't forgot the 30B joint partnership with Brookfield at Arizona. And government subsidy.

Also Pat G said in an interview that TSMC CapEx is split between Leading edge logic and mature logic, whereas Samsung is logic and memory. Intel is leading edge logic capex only company.

 

[Daniel Nenni]

26 billion is just a fraction of the overall CapEx commitment Intel is making. Don't forgot the 30B joint partnership with Brookfield at Arizona. And government subsidy.

Also Pat G said in an interview that TSMC CapEx is split between Leading edge logic and mature logic, whereas Samsung is logic and memory. Intel is leading edge logic capex only company.

I think TSMC CAPEX is 80/20 but why wouldn’t you mention TSMC’s joint partnerships and subsidies? and it doesn’t matter how much Samsung spends on logic if they don’t yield.

 

[count]

Intel Capex also spread between multiple businesses, while TSMC Capex is 100% foundry.

 

[hskuo]

In a contest where capex rules, TSM is clearly winning the race with 36 billion versus 26 billion for Intel. Not only that, TSM's costs are lower than Intel's further increasing the gap between the two. Doing business in the US is more expensive than Taiwan. It looks like TSM will keep increasing the gap between the two as it has been doing for years. Any thoughts or comments on this sought and appreciated.

Samsung is planning on a capex of over 200 billion, but no details on what products or time frame.

Quoted from earnings call:
TSM 2023 Capex will be US$32B. Advanced nodes weights 70% = US$22.4B. If we add up mask shop Capex (Most for advance nodes, assumed 1/3 of 10%) =US$0.96B. Total will US$24B. It is for 2023. For next year and after, it is tricky to estimate it now.
If we consider new fab construction cost which will be 2x higher in US than Taiwan and fab clustering effect, the effective new capacity of advanced nodes from intel definitely will be lower than TSM. If we consider yield and count effective chip delivery, then it will be another story.

Oct. 19: TSMC Q3 net profit up over 16% from Q2; gross margin beats estimate

As for its capex budget, TSMC said 2023 spending is expected to be about US$32 billion, unchanged from an earlier estimate made in July, compared with US$36.29 billion in 2022.

The capex budget serves as a barometer of market conditions by demonstrating how much a chipmaker is willing to spend on expansion.

In the third quarter, TSMC's capex totaled US$7.1 billion, down 13.1 percent from a quarter earlier and also down 18.9 percent from a year earlier, the company said.

In the first nine months of this year, the chipmaker's capex totaled US$25.21 billion, down 1 percent from a year earlier, according to TSMC.

Capex allocation
TSMC will allocate about 70 percent of its 2023 capex to high-end technology development, 20 percent to mature processes and specialty processes development and 10 percent to advanced IC packaging and testing, as well as photomasking technologies, Huang said.

 

[delong.height]

I think TSMC CAPEX is 80/20 but why wouldn’t you mention TSMC’s joint partnerships and subsidies? and it doesn’t matter how much Samsung spends on logic if they don’t yield.

depending on what kind/type of joint partnership you're referring to? If you mean the ESMC, or the JASM, they are all not leading edge, I think. And they are all semiconductor companies getting together to build regional semiconductor supply chains. Like ESMC for example, (TSMC, Bosch, Infineon, and NXP) are all semiconductor companies. For JASM, Sony also makes semiconductor.

So, in this case, Intel is different because it is much more exclusive than others. We haven't seen deals like these being done except Tower at New Mexico. Intel said its SCIP is the first of its kind in semiconductor industry where Intel manages the fab while Brookfield provide financial support. So, Intel totally owns the fab, but its financing is done differently.

And we know that Taiwan government has always been generously providing subsidies to TSMC and other local semi companies. I think TSMC's financial statements have well incorporate those facts while Intel hasn't gotten much subsidy from CHIPS act. And there's no such industrial policy in the US for the last decades and more. I agree with the last sentence.

 

[delong.height]

depending on what kind/type of joint partnership you're referring to? If you mean the ESMC, or the JASM, they are all not leading edge, I think. And they are all semiconductor companies getting together to build regional semiconductor supply chains. Like ESMC for example, (TSMC, Bosch, Infineon, and NXP) are all semiconductor companies. For JASM, Sony also makes semiconductor.

So, in this case, Intel is different because it is much more exclusive than others. We haven't seen deals like these being done except Tower at New Mexico. Intel said its SCIP is the first of its kind in semiconductor industry where Intel manages the fab while Brookfield provide financial support. So, Intel totally owns the fab, but its financing is done differently.

And I was only thinking about Intel-Brookfield deal when writing on this board.

In a contest where capex rules, TSM is clearly winning the race with 36 billion versus 26 billion for Intel.

And had TSMC not build in the US, that 36 billion figures would be smaller, and Intel's figure would get even smaller if Intel go and build in Taiwan. So, it's not an apple-to-apple comparison, or it can be if you take geopolitical factor into account.

Intel Capex also spread between multiple businesses, while TSMC Capex is 100% foundry.

can you justify?

 

[Daniel Nenni]

And I was only thinking about Intel-Brookfield deal when writing on this board.

I don't really understand the Intel-Brookfield deal. Why would Intel do this? Isn't it going to lower margins?

"The two companies didn't disclose specific terms. David Zinsner, Intel's finance chief, told analysts the interest rate was between 4.4% and 8.5%, which is more expensive than debt financing but cheaper than equity financing."

 

[Barnsley]

So the sky not falling in for suppliers to said Companies?

There is a lot of money to made out there for someone

 

[blueone]

I don't really understand the Intel-Brookfield deal. Why would Intel do this? Isn't it going to lower margins?

Here's Intel's story:

Intel Advances Smart Capital, Introduces First-of-its-Kind Semiconductor Co-Investment Program for Manufacturing Build-Outs

www.intc.com

I think this is a piece of a larger financial strategy that includes the Mobileye and Altera spinouts, which raise capital without decreasing cash-flow or diluting equity, to finance a manufacturing expansion Intel can't afford through conventional strategies of issuing equity and debt. It looks brilliant, if you think the merchant chip business growth is going to slow significantly, and IFS is a must-have. Intel retains control of the spin-outs and the fabs, but gains, I don't know, about $100B in cash to invest over a period of years. The BoD is obviously betting the company on IFS.

 

[Arthur Hanson]

Any thoughts on Intel winning the IFS game?