Semiconductor Stocks: Winners And Losers After Apple's Bombshell

But the M1 also presents a threat to AMD's graphics chip (GPU) business. Apple uses AMD graphics cards in its more advanced Mac models. But with the M1's integrated graphics, it looks like Apple will dispense with discrete graphics in all models – even the mighty Mac Pro. While Apple's graphic card needs are a small part of AMD's business, the concept is likely to take hold among ARM CPU designers as well. And that would threaten AMD's PC graphics business.

WINNER – NVIDIA Corp.: NVIDIA sits in an unusual position regarding ARM. Softbank recently agreed to sell Arm Holdings to NVIDIA for $40 billion. If the deal goes through (not a certainty), it means NVIDIA (NVDA) would collect the global licensing revenue from ARM-based designs. In a world where ARM starts to displace x86, that licensing revenue would accelerate sharply.

But if it embraces the idea of ARM-based CPUs, NVIDIA could realize a far bigger opportunity. Like AMD, NVIDIA has dabbled in ARM technology. But bringing Arm Holding's engineers on board would change the equation. In a conference call after the deal was announced, NVIDIA CEO Jensen Huang suggested the company was likely to build ARM-based CPUs targeted at the server market. With ARM technology in house, NVIDIA would have a big advantage over rivals. And it has the resources to make a serious run at Intel's server business. NVIDIA is already a top semiconductor stock; shares are up 145% over the past 12 months. A strong and rapidly growing ARM business could turbocharge this stock.

WINNER – Taiwan Semiconductor Manufacturing Co. Ltd.: TSMC is not a chip designer but a chip manufacturer – a "fab" in the industry lingo. It was already fabricating all of Apple's ARM-based processors, so the additional M1 business is a win. The company counts among its customers most of the world's chipmakers, including Qualcomm, AMD, and NVIDIA.

TSMC developed the cutting edge 5nm process Apple uses in the M1, and it's planning on rolling out a 3nm process in 2022. That puts TSMC a couple of generations ahead of Intel, making it an even more popular choice for chip firms churning out ARM-based designs. No matter who wins the race to build the best ARM-based CPU, TSMC is likely to get the business.

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