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Intel’s (NASDAQ:INTC) got a fan at Northland Capital Markets.
Analyst Gus Richard said he’s “confident” in the company’s execution and expects Intel (INTC) to gain share in x86 microprocessors next year.
“We believe system-in-package will fundamentally change the semiconductor industry,” Richard wrote in a note. “Over time, fabless and IP companies will sell chiplets rather than chips and IP, respectively.”
Richard added that Taiwan Semiconductor (NYSE:TSM) and Intel will dominate the system foundry market, and as such, outsourced semiconductor assembly and test, or OSATs, vendors of system-in-package, or SiP, will be “disintermediated.”
He explained that this evolution will take time to happen, but evidence is mounting that it occurs and as such, Intel is “better positioned than widely recognized.”
Shares of Intel (INTC) are up 1.8% on Tuesday.
Advanced Packaging is the low-hanging fruit driving small, faster and cheaper product, Richard explained. As such, OSATs don’t have the technology to compete against Intel (INTC) and Taiwan Semiconductor (TSM) in the system-in-packaging market.
Intel (INTC) added two unnamed packaging customers in the third-quarter, with six more in the pipeline because Taiwan Semi’s (TSM) advanced packaging capacity is sold out, and there is no other alternative to Intel (INTC), Richard explained.
Northland said it sees Intel (INTC) executing its process technology roadmap and becoming increasingly competitive. “We see no architectural lever that will offset the process technology advantage over the next few years,” Richard posited.
There is also opportunity in system-in-package — a method used for bundling multiple integrated circuits and components into a single package.
Apple (AAPL), Tesla (TSLA), Amazon (AMZN), Google (GOOG) (GOOGL) and Microsoft (MSFT) are making their own chips, which can be included in Intel’s (INTC) SiP products with an x86 and other CPUs.
“We do not think this would cannibalize the x86 market but expand INTC [foundry services] revenue opportunity,” Richard said.
Shares of Intel (INTC) are up nearly 39% year-to-date.