A Jefferies company note covering the semiconductor sector focused on risks to Taiwan Semiconductor Manufacturing Company (TSMC) (NYSE: TSM). The major risk highlighted by Jefferies focuses on the possibility that Apple (Nasdaq: AAPL) might choose Intel (Nasdaq: INTC) as its secondary source for semiconductors.

If Apple selects Intel, it would not necessary represent a huge win for Intel, since it would not add significantly to earnings near term. But if Intel is able to gain a foothold in the smartphone segment of the semiconductor manufacturing market, this would certainly be a threat TSMC, given the intense competition it would face from the technology giant.

So far Apple hasn't made a decision one way or the other, and it is anyone's guess what the final verdict will be. What the Jefferies report does is warn that TSMC could lose twice if Intel wins.

"While TSMC's stock price might not be factoring in a 2nd source win with Apple, neither is it discounting the rising possibility that Intel could win the business," the analyst said. "This is unlikely to be viewed positively by the market."

Jefferies currently has a HOLD rating on TSMC and a price target of $82.