Tech Hardware Supply Chain - Gazhoo

Bhavin Shah
(852) 2800-8538
bhavin.a.shah@jpmorgan.com
Figure 213: Net margin comparison among foundry companies
40%
30%
20%
10%
0%
-10%
-20%
-30%
334
2002 2003 2004 2005 2006 2007 2008 2009E
TSMC UMC Chartered SMIC Vanguard
Source: Company reports, J.P. Morgan estimates.
Figure 215: Top 4 foundry non-depreciation COGS as % of sales
65%
55%
45%
35%
25%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E
Source: Company reports, J.P. Morgan estimates.
Asia Pacific Equity Research
20 April 2009
TSMC UMC Chartered SMIC
Comparison of top four foundries
TSMC has been the most profitable large-size semiconductor company and one of
the most profitable industrial firms globally. TSMC has the dominant market share of
leading-edge nodes. It has had a market share of around 70% in 90nm for a long
time, notwithstanding the maturity of that node. We estimate that TSMC still
accounts for >85% revenue market share for 65nm/55nm bulk CMOS technologies.
TSMC has been less vulnerable to an end-demand slowdown due to its leadership in
advanced node technology, lean cost structure, high capital efficiency, and lower
breakeven utilization level. We continue to believe that TSMC is the only foundry
that gets adequate returns from its investment in new technology.
Figure 214: ROIC comparison among foundry companies
40%
30%
20%
10%
0%
-10%
-20%
-30%
2002 2003 2004 2005 2006 2007 2008 2009E
TSMC UMC Chartered SMIC Vanguard
Source: Company reports, J.P. Morgan estimates.
Figure 216: Top 4 foundry depreciation COGS as % of sales
90%
70%
50%
30%
10%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E
TSMC UMC Chartered SMIC
Source: Company reports, J.P. Morgan estimates.