The semiconductor foundry sector is currently experiencing a wave of excitement and concernCompanies like Taiwan Semiconductor Manufacturing Company (TSMC) have reported impressive revenue growth thanks to the booming demand for artificial intelligence (AI) technologiesHowever, other major players, like Intel, are grappling with rumors and challenges that could impact their future

TSMC has been rapidly expanding its operations worldwide while confirming that it has no intentions of acquiring Intel's foundry business.

On October 17th, TSMC released its financial report for the third quarter of 2024, showcasing a striking revenue of $23.5 billion — a 39% year-over-year increase

With a gross margin of 57.8% and net profit reaching $10.1 billion (up 52%), TSMC exceeded industry expectations and solidified its position at the forefront of semiconductor manufacturing.

Looking forward, TSMC anticipates revenue between $26.1 billion and $26.9 billion for the fourth quarter, reflecting a year-over-year increase of 33% to 37%, with the gross margin expected to range from 57% to 59%. Furthermore, TSMC forecasts an overall revenue growth of 30% for 2024, surpassing its previous target set in June of this year, which estimated growth between 20% and 25%.

Advanced manufacturing processes remain the primary revenue driver for TSMC

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The report revealed that revenue from advanced nodes (7nm and smaller) accounted for 69% of total quarterly wafer salesNotably, 20% of the shipments came from 3nm technology, 32% from 5nm, and 17% from 7nmTSMC indicated that AI server revenue contributions have more than tripled compared to last year, with the AI demand only just beginning and expected to persist for many years.

On the manufacturing footprint front, TSMC's first special process wafer fab in Kumamoto has completed process qualification and will begin mass production this quarter, with a second fab in Kumamoto slated to begin construction in Q1 2025. In Arizona, the first wafer fab is expected to commence production in early 2025. The second and third fabs in Arizona will adopt more advanced process technologies based on customer demand, with the second starting production by 2028 and the third by the end of the 2020s

In Germany, the fab in Dresden is set to begin production at the end of 2027.

During the earnings conference, a question regarding the possibility of TSMC acquiring Intel's foundry business aroseTSMC's CEO C.CWei decisively stated that the company has no interest in acquiring Intel's wafer factory.

Qualcomm and Intel are caught in a web of speculation, with complicated implications.

In contrast to TSMC's clear stance, the relationship between Qualcomm and Intel is somewhat more convoluted.

Reports surfaced in September indicating that Qualcomm had extended an initial acquisition invitation to Intel, with negotiations reportedly in their infancy, lacking any formal offer at this point

However, both Qualcomm and Intel have refrained from commenting on the matter.

Experts suggest that Qualcomm's interest in acquiring Intel is primarily focused on gaining Intel's design capabilities, while the intention does not include Intel's foundry businessThis move could potentially bolster Qualcomm's positioning within the PC market.

Considering the size of both Qualcomm and Intel, if an acquisition agreement is reached, it could become one of the most significant mergers in tech historyNonetheless, considerable uncertainties remain, particularly due to regulatory scrutiny from agencies around the world, presenting a significant hurdle for such a transaction.

Amidst these developments, Intel is ramping up its defensive strategies in semiconductor manufacturing.

Finding itself at the center of discussions, Intel announced significant restructuring efforts in September, positioning itself to defend its territory within the semiconductor manufacturing realm.

Intel's CEO Pat Gelsinger revealed plans to establish Intel Foundry as a wholly-owned subsidiary, expected to finalize this administrative structure by the end of the year

The leadership team of the foundry services remains unchanged, continuing to report directly to GelsingerAn operations board comprised of independent directors will also oversee this newly created subsidiary.

Additionally, Intel announced the expansion of its strategic partnership with Amazon Web Services (AWS), which includes joint investments in customized chip designsTheir multi-year, billion-dollar framework agreement encompasses Intel's products and wafersThe Intel Foundry will develop an AI chip on Intel's 18A process for AWS and a customized Xeon 6 chip based on Intel 3 manufacturing to supply AWS with Xeon Scalable processors.

Moreover, Intel has adjusted the scope and pace of its global chip factory expansion as follows:

· In the European market, Intel has ramped up production capacity at its wafer fab in Ireland, designating it as a key manufacturing hub in Europe; projects in Poland and Germany will be paused for approximately two years.

· In Asia, Intel deems Malaysia as an active design and manufacturing center, planning to complete its advanced packaging plant in Malaysia