Shares of Taiwan Semiconductor Manufacturing (TSM) - Get Report rallied on Monday after U.S. chipmaker Intel (INTC) - Get Report said it faces delays for its next-generation chips, raising speculation that TSMC could be the backup contender to produce the chips for Intel as part of its "contingency plans."
American depositary receipts of the Taiwanese foundry chipmaker rose more than 11% on Monday after Intel announced that it was delaying the release of its next-generation chips containing so-called 7-nanometer transistors.
During its second-quarter earnings call last Thursday, Intel said it had found an issue in the 7-nanometer manufacturing process but that it had made “contingency plans,” which includes looking at third parties to manufacture the semiconductors.
The initial news of the chip-production slip sent Intel’s shares down some 16% on Friday, wiping $41 billion from its market value. TSMC’s market value, meantime, rose by some $33 billion on Monday.
Shares of Apple hit new highs last month after it announced it was dropping Intel’s chips in favor of in-house designs for its Macs, with plans to launch four MacBooks powered by its own silicon over the next 12 months or so, according to reports.
Mobile chip company Qualcomm (QCOM) - Get Report and graphics processor maker Nvidia (NVDA) - Get Report, which design chips and also rely on TSMC for manufacturing, will also benefit in the long run, according to analysts.
Samsung Electronics, another company that operates a foundry business, could also potentially take some of Intel’s business, according to reports.