TAIPEI, Taiwan - According to a recent report by Deutsche Bank AG, TSMC is poised to command more than 70 per cent of the global market for 28-nanometer and 32-nanometer semiconductor fabrication, as the Taiwan-based sector bellwether commences mass production of its high-performance 28-nanometer variant (HPC) designed to power low- and mid-tier mobile devices.
The institutional investor stated that TSMC's 28-nanometer HPC offering is compatible with 64-bit mobile operating systems and long-term-evolution (LTE) mobile broadband networks, and that the company's lead will not be challenged by second-tier semiconductor foundries in 2015, due to the immense difficulty of surmounting considerable technical threshold.
TSMC's hold on the 32- and 28-nanometer fabrication market is poised to rise to 78 per cent and 74 per cent toward the end of this year, much higher than the 62-per cent and 55-per cent market share recorded during the previous 45- and 40-nanometer era, said the institutional investor.
Deutsche Bank added that as current pursuits toward the more advanced 20-, 16- and 14-nanometer fabrication process by a number of second tiered foundries are still challenged by diminishing yield rates, they remain upbeat on TSMC's prospects, while issuing a target share price of NT$165 (S$7).
In addition, TSMC has been buoyed by a rise in client orders; by 2015, revenue contribution from the company's 20-nanometer fabrication is expected to rise to 28 per cent of overall sales, gaining significantly over the 4 per cent estimated for this year.
The foreign institutional investor stated that TSMC remains the most likely foundry to overcome challenges in diminishing yield rates in the 16- and 14-nanometer FinFET process, and its performance in the endeavour is expected to exceed second tiered rivals.
Deutsche Bank is expecting TSMC's market share for 16- and 14-nanometer fabrication to rise to 37 per cent by the end of 2015, and accelerate to about 75 per cent by the end of 2016.
The foreign institutional investor added that if TSMC moves up the mass production commencement from the third quarter of next year to the second quarter of 2015, it's market share for the 16- and 14-nanometer process may improve by 20 to 25 per cent next year.
Deutsche Bank, however, noted that if rivaling Samsung decides to leap to the 14-nanometer process by skipping the 20-nanometer generation, TSMC's hold on the 14- and 16-nanometer market share may be impacted in the second half of next year.
Sizeable orders from China
Meanwhile, reports indicate that TSMC is expected to complete about 70 contracts from 10 China-based clients for 28-nanometer fabrication including Spreadtrum Communications, MorningStar, Allwinner Technology and Hisilicon.
With TSMC's full array of 28-nanometer offerings catering to needs ranging from high performance to energy efficiency solutions, the company hold on the niche is poised to affect the prospects of rivaling UMC and China's Semiconductor Manufacturing International Co.