EQUITY RESEARCH INDUSTRY UPDATE April 13, 2021 Daily Chip Clips SUMMARY TECHNOLOGY/SEMICONDUCTORS & COMPONENTS ■ Highlights of the Day: TSMC May Spend Even More this Year (Digitimes) ■ Realtek Ethernet Chip Shortages Not to Have Much Impact on Automotive Supply Chain (Digitimes) ■ Nvidia Unveils "Grace" Deep-Learning CPU for Supercomputing Applications (ExtremeTech) ■ Intel in Talks with Automotive Industry to Supply Specialized Chips (Tom's Hardware) KEY POINTS ■ TSMC is scheduled to hold its investors' conference later this week. Market observers speculate that the foundry house may disclose plans to revise upward its capex budget for 2021, judging from the fact TSMC has recently vowed to spend $100 billion on capacity expansions in the next three years. ■ The short supply of automobile-use Ethernet chips from Taiwan-based Realtek Semiconductor is unlikely to result in significant impacts on the global automotive supply chains, according to industry observers. The observers made the remarks amid rising market speculations indicating that Realtek cannot fulfill its orders for automotive chips, affecting the supply chains of some of the world's major automakers. ■ Nvidia thinks it’s time for traditional CPUs to step aside when it comes to tackling the largest machine learning tasks, especially training huge models that are now upwards of a trillion parameters. Conventional super-computers make use of specialized processors—often GPUs—to do much of the compute-intensive math during training, but GPUs typically can’t host nearly the amount of memory needed, let alone share it quickly in multi-GPU configurations. ■ If there's one area where Intel's ongoing cutting-edge fabrication issues won't be an issue it's the auto industry, where 14nm chips in most cases would be a major advancement. So given the silicon shortages currently plaguing auto plants, it makes perfect sense that Intel wants to step in to produce chips for auto companies. Rick Schafer Andrew Hummel, CFA 720-554-1119 312-360-5946 [email protected] [email protected] Wei Mok 212-667-8387 [email protected] Disseminated: April 13, 2021 00:30 EDT; Produced: April 12, 2021 20:52 For analyst certification and important disclosures, see the Disclosure EDT Appendix. Oppenheimer & Co Inc. 85 Broad Street, New York, NY 10004 Tel: 800-221-5588 Fax: 212-667-8229 TECHNOLOGY / SEMICONDUCTORS & COMPONENTS Headlines Highlights of the Day: TSMC May Spend Even More this Year (Digitimes) TSMC is scheduled to hold its investors' conference later this week. Market observers speculate that the foundry house may disclose plans to revise upward its capex budget for 2021, judging from the fact TSMC has recently vowed to spend $100 billion on capacity expansions in the next three years. ODMs Quanta Computer and Compal Electronics are optimistic about their notebook shipment growths in second-quarter 2021, but remain wary of components shortages undermining their shipments for full- year 2021. Reference Link Realtek Ethernet Chip Shortages Not to Have Much Impact on Automotive Supply Chain (Digitimes) The short supply of automobile-use Ethernet chips from Taiwan-based Realtek Semiconductor is unlikely to result in significant impacts on the global automotive supply chains, according to industry observers. The observers made the remarks amid rising market speculations indicating that Realtek cannot fulfill its orders for automotive chips, affecting the supply chains of some of the world's major automakers. Reference Link Nvidia Unveils ‘Grace’ Deep-Learning CPU for Supercomputing Applications (ExtremeTech) Nvidia thinks it’s time for traditional CPUs to step aside when it comes to tackling the largest machine learning tasks, especially training huge models that are now upwards of a trillion parameters. Conventional super-computers make use of specialized processors—often GPUs—to do much of the compute-intensive math during training, but GPUs typically can’t host nearly the amount of memory needed, let alone share it quickly in multi-GPU configurations. So the machine is often bottlenecked by the speed of getting data from CPU memory to the GPU and back. Reference Link Intel in Talks with Automotive Industry to Supply Specialized Chips (Tom's Hardware) If there's one area where Intel's ongoing cutting-edge fabrication issues won't be an issue it's the auto industry, where 14nm chips in most cases would be a major advancement. So given the silicon shortages currently plaguing auto plants, it makes perfect sense that Intel wants to step in to produce chips for auto companies. But while Intel is reportedly already in talks with several car companies, don't expect Intel silicon to solve production problems any time soon. Reference Link 2 TECHNOLOGY / SEMICONDUCTORS & COMPONENTS Stock prices of other companies mentioned in this report (as of 4/12/21): Quanta Computer Inc. (2382-TW, KRW97.4, Not Covered) Compal Electronics, Inc. (2324-TW, KRW27.2, Not Covered) Realtek Semiconductor Corp (2379-TW, KRW482.5, Not Covered) Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM, $120.9, Not Covered) 3 TECHNOLOGY / SEMICONDUCTORS & COMPONENTS Disclosure Appendix Oppenheimer & Co. Inc. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. 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Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by Oppenheimer & Co. Inc: Stock Prices as of April 13, 2021 NVIDIA Corp. (NVDA - NASDAQ, $608.36, OUTPERFORM) Intel Corp. (INTC - NASDAQ, $65.41, PERFORM) Rating and Price Target History for: NVIDIA Corp. (NVDA) as of 04-09-2021 08/17/18 11/16/18 01/28/19 11/12/19 02/11/20 02/13/20 05/22/20 08/17/20 08/19/20 10/05/20 02/17/21 O:$310 O:$250 O:$190 O:$250 O:$300 O:$350 O:$400 O:$500 O:$550 O:$600 O:$700 700 600 500 400 300 200 100 2019 2020 2021 Created by: BlueMatrix 4 TECHNOLOGY / SEMICONDUCTORS & COMPONENTS Rating and Price Target History for: Intel Corp. (INTC) as of 04-09-2021 70 65 60 55 50 45 40 2019 2020 2021 Created by: BlueMatrix All price targets displayed in the chart above are for a 12- to- 18-month period. Prior to March 30, 2004, Oppenheimer & Co. Inc. used 6-, 12-, 12- to 18-, and 12- to 24-month price targets and ranges. 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