What is a semiconductor foundry?

A semiconductor foundry is a factory that manufactures chips designed by other companies. Unlike integrated device manufacturers (IDMs) like Intel that traditionally design and make their own chips, pure-play foundries like TSMC focus solely on manufacturing chips for others. As chip production becomes incredibly complex and expensive, more companies are going "fabless" - designing chips but outsourcing production to specialized foundries.

What is Intel's 18A process and why does its pivot matter?

Intel's 18A refers to its advanced 1.8 angstrom (18 angstroms = 1.8 nanometers) chip manufacturing process that was meant to help Intel compete with TSMC in making chips for external customers. Intel potentially stepping back from offering this technology to outside customers suggests significant challenges in this competitive market. This matters because it potentially cements TSMC's leadership position and affects the entire ecosystem of companies that rely on advanced chip manufacturing.

What are "fabless" companies?

Fabless companies design semiconductor chips but outsource their manufacturing to specialized foundries like TSMC or GlobalFoundries. Companies like NVIDIA, AMD, and Qualcomm are prominent examples. This business model allows these companies to focus on design innovation without the massive capital investment required to build and operate chip factories (fabs). The fabless model has become increasingly popular as manufacturing costs have skyrocketed, making the stability and capabilities of foundry partners critical to these companies' success.

What is EUV and why is ASML important?

EUV (Extreme Ultraviolet Lithography) is an advanced chip manufacturing technology that uses ultraviolet light to create incredibly tiny circuit patterns on silicon wafers. ASML is critically important because it's the only company in the world that makes the EUV lithography machines required for cutting-edge chip production. These machines cost approximately $150-200 million each and are essential for manufacturing the most advanced semiconductors. TSMC, as the leading foundry, is one of ASML's biggest customers, creating a strong link between ASML's success and TSMC's continued industry dominance.

How does a company's "projected profit" differ from current performance?

Projected profit represents analysts' expectations for a company's future earnings, typically for the coming year or quarter. Unlike current financial results which reflect past performance, these projections incorporate anticipated industry trends, company-specific developments (like Intel's foundry pivot), and broader economic factors. For semiconductor companies, these projections often consider product cycles, manufacturing capacity, and competitive dynamics. While these forecasts provide valuable perspective, they remain estimates that may change as conditions evolve.

15 handpicked stocks

Intel's Foundry Pivot: Winners from a Strategic Shift

This carefully selected group of stocks represents companies positioned to benefit from Intel's potential retreat from advanced chipmaking for external customers. Professional analysts have identified these opportunities as Intel's pivot reinforces TSMC's dominance and reshapes the semiconductor landscape.

Han Tan | Market Analyst

Updated 2 days ago | Published at juillet 3