Advanced Micro Devices Inc. could. continue to see a strong trend, partly due to recent strategic choices made by rival Intel Corp., according to an analyst.
Northland Capital Markets Analyst Richard Richard AMD, AMD,
to outperform market performance Thursday, writes that Intel INTC,
“They made a strategic faux pas” when the company said earlier in the week that they plan to start offering furnace services, while at the same time making some of their own cracks and taking out others.
Comment: Intel ‘s new CEO is making heavy moves in manufacturing
As Intel competes with Taiwan Semiconductor Manufacturing Co. Ltd. TSM,
2330,
with the foundry industry while exporting some of its own products to TSMC, the company could be TSMC’s “persona non grata,” according to Richard AMD also uses TSMC for manufacturing, and its business could become increasingly important to TSMC now that Intel has rocked the ship, he said.
“We believe Intel’s commitment to re-entering the foundry market and maintaining advanced manufacturing capability makes it a low priority for TSMC,” Richard wrote in a note to clients. “AMD and [Xilinx] on the other hand they are the preferred customers of TSMC as their advanced measurement is achieved by TSMC and the more they win the more TSMC will win. ”
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The new dynamic may “mean that AMD’s earlier access to technology and better capacity allocation will secure the company’s x86 process technology leadership in the future,” he continued, which the company could help lift higher average selling prices and boost its margins.
Richard sees the possibility that Intel may be able to drive better performance through packaging technology but said this is still unproven and some years out.
While AMD shares are up 17% so far this year, they have gained 71% over 12 months as Intel shares have gone up 25% and like the S&P 500 SPX,
increased 57%.