ASML Holding NV (ASML) is emerging as the winner of the Silicon Wars between Intel Corp. (INTC), Samsung Electronics (KRX:005930) and Taiwan Semiconductor Manufacturing Company (TSM), says Mark Li, Senior Research Analyst at Sanford C. Bernstein & Co., LLC. While the semi giants battle for market share in PCs and smartphones, ASML will be selling equipment to all of them as they continually try to outdo each other in capacity buildout.
“The Silicon Wars basically has these two factors — rising cost and intensifying competition,” Li said. “What we are seeing is that competition pressure among Intel and TSMC literally are forcing them to accelerate instead of decelerate. They all want to gain more share to offset the cost increase. So they are actually spending more in capex. Because of this, the profitability of these players likely would be compressed in the next few years.”
Li adds that the lines between PCs and smartphones have blurred, pitting Intel, Samsung and TSMC against each other in an increasing fashion. “Intel mainly did chips for PCs, and TSMC made chips for handsets, and Samsung concentrated on memory chips,” Li said, but now the niches have mixed.
“Regardless the outcome of this war, the undisputable winner is the arms dealer,” Li said. “So the companies that sell equipment to these companies to build capacity will benefit. The company we have in mind is ASML. They are the biggest tool vendor in semiconductor space, and has very high share. So they will be the winner on this Silicon War.”
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