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Apple may partner with TSMC for A5 production in potential blow to Samsung

post #1 of 34
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Apple has allegedly inked a deal with chipmaker Taiwan Semiconductor Manufacturing Co. to produce the A5 chip for the iPad 2, a move that is seen as a potential loss for Samsung.

Apple is rumored to have entered a foundry agreement with TSMC to build the A5 processor, according to EETimes. In addition to powering the new iPad 2 set for release on Friday, Apple's custom dual-core A5 processor is also expected to power the anticipated iPhone 5, expected to debut this summer.

For its current devices, Apple partners with Samsung for production of the A4 processor. Last year's first-generation iPad featured two Samsung dies stacked inside the A4 chip.

Apple is expected to spend $7.8 billion on components from Samsung alone in 2011, for parts including liquid crystal displays, processors and NAND flash memory chips in mobile devices including the iPhone and iPad. The deal would make Apple the largest customer of Samsung.

The EETimes report said Apple is making the switch for three reasons, one of them being the fact that Samsung competes with both the iPhone and the iPad with its own devices. Last year, Samsung released the Galaxy S smartphone to compete with the iPhone 4, and the Galaxy Tab to take on the iPad. Both Android-powered product lines will receive updates this year.

Apple is also said to be exploring TSMC because it has the highest yielding 40 nanometer processor in the world, along with the most 40 nanometer capacity. The report said it is now "unclear" whether Samsung will play any part in building the A5 chip for Apple in the future.
post #2 of 34
Of course Apple should spread work across their suppliers, Samsung aren't the only ones in this Galaxy after all.
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post #3 of 34
I don't trust TSMC. Both ATI and Nvidia have had serious problems with them for years. They should be on a smaller process now, but it failed. This is common for them.
post #4 of 34
Quote:
Originally Posted by digitalclips View Post

Of course Apple should spread work across their suppliers, Samsung aren't the only ones in this Galaxy after all.

Darn. Beat me to it - maybe Apple is tired of this game and wants to kick some S?
post #5 of 34
Quote:
Originally Posted by AppleInsider View Post

Apple is also said to be exploring TSMC because it has the highest yielding 40 nanometer processor in the world, along with the most 40 nanometer capacity. The report said it is now "unclear" whether Samsung will play any part in building the A5 chip for Apple in the future.

If their history is that unstable I doubt that Apple will bet the farm on them - can't see Samsung out completely. Keeps Apple in a better position to have competitors than single suppliers I would think.
post #6 of 34
What fabrication process is this SoC on, anyone know? Still 45nm?
post #7 of 34
It would be wise for Apple to have second-sourcing for components, just in case there's a need for higher capacity or some other unforeseen slowdown or stoppage of component production. Apple is producing very high numbers of devices using the same processors across its entire iOS line-up so Apple may be just playing it safe.
post #8 of 34
Quote:
Originally Posted by Damn_Its_Hot View Post

Darn. Beat me to it - maybe Apple is tired of this game and wants to kick some S?

Yeah, it sends a message: Compete with us, and we'll stop doing business with you. Which is logical enough when you get right down to it.
post #9 of 34
Why not outsource it to GlobalFoundries? They are only in the fab business and wont be competing with Apple with their own smooth tablet.

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post #10 of 34
Quote:
Originally Posted by tipoo View Post

What fabrication process is this SoC on, anyone know? Still 45nm?

Pretty sure it's 40nm.
post #11 of 34
Quote:
Originally Posted by Aizmov View Post

Why not outsource it to GlobalFoundries? They are only in the fab business and wont be competing with Apple with their own smooth tablet.

I suspect Apple wants to see GF prove that it can be a reliable supplier. Apple remembers all to well the frustrations of using IBM-based fab technology with the PPC, and GF is basically AMD's old fabs, which were also based on IBM tech and also had a lot of problems over the past decade.
post #12 of 34
Quote:
Originally Posted by Constable Odo View Post

It would be wise for Apple to have second-sourcing for components, just in case there's a need for higher capacity or some other unforeseen slowdown or stoppage of component production. Apple is producing very high numbers of devices using the same processors across its entire iOS line-up so Apple may be just playing it safe.

Also, if rumours are to be believed, the difference between Apple's SoC and others built on the same ARM reference platform is their own IP on powersaving tech. I've never quite understood how they can have competitors build their chips without expecting the secrets to be stolen. It's not lke Samsung can turn their head away while they are manufacturing Apple's secret chip.
post #13 of 34
So Samsung is trading $11 billion in sales to Apple in favor of the "smooth" selling Galaxy Tab?
post #14 of 34
Quote:
Originally Posted by melgross View Post

I don't trust TSMC. Both ATI and Nvidia have had serious problems with them for years. They should be on a smaller process now, but it failed. This is common for them.

That's because those manufacturers rush to a new process ASAP because it brings a dramatic increase in performance for their cards. CPU manufacturers are much more cautious because most of the die space isn't for the CPU itself, but cache. GPU manufacturers also use half-nodes, which Intel and AMD don't bother with because they would be retooling their factories yearly.

Quote:
Originally Posted by tipoo View Post

What fabrication process is this SoC on, anyone know? Still 45nm?

40nm today, 28nm by the end of the year.
post #15 of 34
Where is the rumor that Apple is building a plant to build SoCs out a solid block of metal?
post #16 of 34
The growth potential in iOS devices demands that apple have multiple suppliers of components and that they keep them all busy and improving their processes. Securing a certain percentage of work from apple will allow these suppliers to make plans to expand and raise capital more easily. That's a win win for them and apple and keeps the supply stream fed. Samsung's competition with apple is, I think, important in these decisions but only a part of the decision--not the whole picture.
post #17 of 34
Quote:
Originally Posted by Blastdoor View Post

So Samsung is trading $11 billion in sales to Apple in favor of the "smooth" selling Galaxy Tab?

Yes. They screwed up. But if tablets are destined to take the place of PCs in, say, 60% of their current uses, while at the same time creating new uses constituting an additional, say, 15% of the current PC market... Well, that's such a colossal new marketplace that no one, including Samsung, could ignore it. And Samsung, because they were an Apple supplier, probably figured they had an edge.

But yeah - they screwed up. They should have focused on simply keeping Apple's business, which itself might well have grown for them.
post #18 of 34
Quote:
Originally Posted by Damn_Its_Hot View Post

Darn. Beat me to it - maybe Apple is tired of this game and wants to kick some S?

True, true. But Apple should continue sourcing at least some components from Samsung--you know, just to keep Tabs on them...
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post #19 of 34
Quote:
Originally Posted by Logisticaldron View Post

Where is the rumor that Apple is building a plant to build SoCs out a solid block of metal?

No, no, get your absurd fanboy pipe dreams right.

It's a white G5 SoC made of sprayed metal, with a Blu-ray drive and Ultra Retina Display, delivered to you by Megan Fox riding a pink unicorn. It costs zero dollars and uses no power.
post #20 of 34
Quote:
Originally Posted by Mister Snitch View Post

Yes. They screwed up. But if tablets are destined to take the place of PCs in, say, 60% of their current uses, while at the same time creating new uses constituting an additional, say, 15% of the current PC market... Well, that's such a colossal new marketplace that no one, including Samsung, could ignore it. And Samsung, because they were an Apple supplier, probably figured they had an edge.

But yeah - they screwed up. They should have focused on simply keeping Apple's business, which itself might well have grown for them.

Yup.. if they had focused on keeping Apple's business they would have had a shot at becoming the Intel of mobile, which would not be a bad role to play in the industry at all.

Now they will pay the price for their lack of vision...
post #21 of 34
Quote:
Originally Posted by Logisticaldron View Post

Where is the rumor that Apple is building a plant to build SoCs out a solid block of metal?

Naw, they're using 3D printers.
post #22 of 34
This must be viewed more as diversification of key components. If I remember correctly, Korea is one of the countries where Apple has partnered and invested billions of dollars. And, when you deal with Korea, Samsung is the giant.

Of course, Apple should be cautious, as Samsung is becoming a very able competitor in both the smartphone and tablet business.

I wondered actually why Apple trusted its key differentiating technology, the A4 chip, to a company that is attempting to create its own brand in direct competition to Apple. This may be the Achiless heel of Apple, it has no choice but to depend on Asian techno-industry to manufacture its products. Many of these conglomerates tend to manufacture for other Western companies, but are at the same time also trying to develop their own.

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post #23 of 34
Quote:
Originally Posted by Prof. Peabody View Post

Also, if rumours are to be believed, the difference between Apple's SoC and others built on the same ARM reference platform is their own IP on powersaving tech. I've never quite understood how they can have competitors build their chips without expecting the secrets to be stolen. It's not lke Samsung can turn their head away while they are manufacturing Apple's secret chip.

They have patents, copyrights, contracts and a head start. Any technology can be reverse engineered but Apple is ten steps ahead of everyone else.

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post #24 of 34
Quote:
Originally Posted by randyhyde@me.com View Post

Naw, they're using 3D printers.

That may not seem so funny ten years from now.
post #25 of 34
Quote:
Originally Posted by Bageljoey View Post

True, true. But Apple should continue sourcing at least some components from Samsung--you know, just to keep Tabs on them...

Of course. You wouldn't expect less from the REAL Smooth operators.
post #26 of 34
Quote:
Originally Posted by Blastdoor View Post

So Samsung is trading $11 billion in sales to Apple in favor of the "smooth" selling Galaxy Tab?

Not a bet I'd want to take ...
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post #27 of 34
Quote:
Originally Posted by cvaldes1831 View Post

It's a white G5 SoC made of sprayed metal, with a Blu-ray drive and Ultra Retina Display, delivered to you by Megan Fox riding a pink unicorn. It costs zero dollars and uses no power.

I thought it generated power! Darn, will have to wait for next years model.
post #28 of 34
Quote:
Originally Posted by Blastdoor View Post

So Samsung is trading $11 billion in sales to Apple in favor of the "smooth" selling Galaxy Tab?

Irrespective of what Samsung is doing with tablets, it's in Apple's best interest to secure multiple suppliers. While I'm sure Apple sees what Samsung is doing with tablets, if it had any real bearing on this as a primary factor it would really surprise me.
post #29 of 34
Quote:
Originally Posted by Mister Snitch View Post

Yeah, it sends a message: Compete with us, and we'll stop doing business with you. Which is logical enough when you get right down to it.

Except Samsung and Apple have technically been competitors prior for years. Samsung is a electronics maker, they sell monitors, they sell home electronics, both of which competete with Apple products.

This is more about diversifying their suppliers than not dealing with a competitors
post #30 of 34
Quote:
Originally Posted by Aizmov View Post

Why not outsource it to GlobalFoundries? They are only in the fab business and wont be competing with Apple with their own smooth tablet.

Samsung is a founding member of Global Foundaries.

Quote:
Originally Posted by Mister Snitch View Post

Yes. They screwed up. But if tablets are destined to take the place of PCs in, say, 60% of their current uses, while at the same time creating new uses constituting an additional, say, 15% of the current PC market... Well, that's such a colossal new marketplace that no one, including Samsung, could ignore it. And Samsung, because they were an Apple supplier, probably figured they had an edge.

But yeah - they screwed up. They should have focused on simply keeping Apple's business, which itself might well have grown for them.

Samsung didnt screw up.

What they may have "given up" in strictly monetary terms, they have gained brand power by being a CE juggernaut.

Remember, Samsung makes more than just mobile devices. They make a wide swath of products that such a "loss" in contract doesnt hurt the bottom line.

Also, just because a supplier produces a product that competes directly with Apple doesnt mean that Apple's decision to transfer its contract to another contract manufacturer was based solely on this fact alone. All we are doing now is pure speculating.

Business decisions involves a LOT more than just conflict of interest terms. Price, quality of craftmanship, supply availability, supplier flexibility and much, much more are involved. It's not based on just a simple criteria. Companies compare opportunity costs and pick the one with the least when all other factors are taken into consideration.

Quote:
Originally Posted by mstone View Post

They have patents, copyrights, contracts and a head start. Any technology can be reverse engineered but Apple is ten steps ahead of everyone else.

Just a FYI, IBM and Samsung were the top two companies with the most patents for 2010.


Quote:
Originally Posted by Prof. Peabody View Post

Also, if rumours are to be believed, the difference between Apple's SoC and others built on the same ARM reference platform is their own IP on powersaving tech. I've never quite understood how they can have competitors build their chips without expecting the secrets to be stolen. It's not lke Samsung can turn their head away while they are manufacturing Apple's secret chip.

Did you forget that Apple and Samsung has a patent sharing deal between them?

Ever wonder why Apple never sues Samsung for patent infringements?

It may be a hard pill to swallow to Apple fans, but Apple and Samsung are a lot closer to each other than you think.

They are not quite married to each other but are "friends with benefits". Occasionally, they are frienemies ( friend + enemies)



Also, on another note, TSMC have been having issues with build quality. Case example is with nVidia when they've had issues with their numerous Geforce chip defects.

Therefore, what Apple has done is move from a quality production manufacturer to a questionable quality manufacturer in the name of saving costs.

Ever wonder why Apple sticks with Samsung when acquiring a MARJORITY of the DRAM chips? It's because Samsung has a spotless record in quality craftsmanship when it comes to semiconductors.

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post #31 of 34
[delte please

"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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post #32 of 34
Should be 20nm. So the story doesn't seem realistic.
post #33 of 34
Quote:
Originally Posted by Logisticaldron View Post

Where is the rumor that Apple is building a plant to build SoCs out a solid block of metal?

Well I read on AI that some guy said something about Apple fabricating SoCs out of solid blocks of metal.

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post #34 of 34
Quote:
Originally Posted by Blastdoor View Post

I suspect Apple wants to see GF prove that it can be a reliable supplier. Apple remembers all to well the frustrations of using IBM-based fab technology with the PPC, and GF is basically AMD's old fabs, which were also based on IBM tech and also had a lot of problems over the past decade.

There are difference of course as Samsung has optimized for low power while GF tweaked for speed. I bring this up because I believe that A5 is likely being built on a 32nm node, the performance increase with little in the way of greater power demand seems to be an indicator here.

Oh IBM along with GF, Samsung and others are all members of the team that developed the 32nm node.
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