Taiwan Semiconductor (NYSE:TSM) just issued a press release in which it announced that its 16-nanometer FinFET Plus manufacturing technology has just gone into "risk production." The company also stated that it "anticipates" the "volume ramp" of this technology to begin "around July in 2015."
Digging into TSMC's most recent earnings call
On TSMC's most recent earnings call, company management pointed out that it takes about 1.5 quarters between when a particular manufacturing technology "goes into production" and when those chips actually generate revenue for TSMC.
So, if TSMC doesn't suffer any delays to its current 16-nanometer FinFET Plus schedule, production that begins on July 1, 2015, should mean that TSMC recognizes revenue in November. That, as Bernstein's Mark Li observed a while back, would be too late for a next-generation iPhone.
It really looks as though TSMC loses this round
Interestingly enough, on Samsung's most recent earnings call, Samsung's management noted that it's sampling 14-nanometer chips with "a customer that's already been secured." Additionally, Samsung's management stated that the "wafers for mass production" have been "fed in for the target date of going mass production in or at the end of the year."
Samsung even expects that 30% of its 12-inch wafer fab capacity will be producing 14-nanometer wafers by the end of 2015.
If this customer that Samsung is talking about is indeed Apple, then it looks as though TSMC isn't going to be in the next iPhone. Although TSMC should benefit from the ramp of the iPhone 6 and 6 Plus over the next year, any potential loss of the Apple applications processor foundry business could hurt.
Could TSMC eventually rejoin the party?
TSMC suggested on a prior earnings call that its share of the 14/16-nanometer foundry business will be "lower than [that of] a major competitor in 2015," but it did claim that it would "regain" 16-nanometer share in 2016.
Whether TSMC expects to be added on as a second source for the next iPhones and iPads, or whether it expects volumes from other chip vendors to pick up the slack, or some combination of both, isn't quite clear yet.
What does this mean for TSMC stock?
If TSMC's business hinged on whether it won the apps processor slot in the next iPhone, this would obviously be bad news for the stock. However, it's important to keep in mind that TSMC serves a pretty broad range of clients, many of which don't even require leading-edge foundry technology.
This seeming loss of the applications processor slot in the next iPhone could make year-over-year revenue growth comparisons difficult by the middle of next year. However, TSMC still has a lot of low-end and mid-range smartphone exposure via the various merchant chip suppliers such as MediaTek, so growth there could help offset the potential loss of the Apple processor business this round.
What does this mean for Samsung?
As I have written about in the past, Samsung is probably going to focus even harder on its semiconductor logic foundry business, particularly as it seems possible that Samsung could take a pretty sizable bite out of TSMC's business.
While it now seems clear that Samsung should do very well during the 14-nanometer generation, it'll be interesting to see if this momentum will extend into the 10-nanometer manufacturing node and beyond. If Samsung is ultimately successful in building a sustainable, profitable foundry business, then it could mean very good things for Samsung's business and ultimately its stock price.