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Apple rumored to move production of custom 'A6' chip away from Samsung in 2012

post #1 of 68
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Apple is rumored to further distance itself from its rival Samsung starting with the "A6" chip in 2012, when the iPhone maker will allegedly transition production of its custom ARM chips to a new chipmaker.

Citing "numerous sources in the semiconductor industry," Ars Technica reported on Monday that Apple is likely to tap Taiwan Semiconductor Manufacturing Company to build its next-generation "A6" chip in 2012. Author Chris Foresman characterized chatter about a deal between Apple and TSMC as "deafening."

"It seems likely that Apple is making the change to cut some, if not all, Samsung-made components out of its supply chain," the report said.

The claims come days after a separate report out of China's Commercial Times also pointed to TSMC as a likely partner for production of Apple's anticipated A6 chip in 2012.

The current A5 processor found in the iPad 2 is built on a 45nm process by Samsung. But Apple and TSMC are rumored to build the next-generation A6 ARM CPU based on a 28nm process.

Apple's desire to move away from Samsung stems largely from the fact that the two companies are engaged in a series of lawsuits against one another. Apple has accused Samsung of copying the look and feel of the iPhone, iPad and the iOS mobile operating system, while Samsung has sued Apple and accused it of patent infringement.

The growing legal battle makes for an uneasy situation between the two companies, as the success of the iPhone and iPad has made Apple the largest customer of Samsung. Apple is expected to buy some $7.8 billion in components from Samsung this year.



Rumors of a partnership between Apple and TSMC are not new. Back in March, it was claimed that Apple could align with TSMC on an even faster timetable, having the company produce A5 chips for the iPad 2 and anticipated fifth-generation iPhone.

Earlier rumors suggested that Apple and TSMC had already entered into a foundry agreement, though Monday's report suggests that such a deal was not reached. But both reports also noted that Apple's interest in TSMC is at least partially a result of the fact that there are few options for system-on-a-chip fabrication outside of Samsung.

In May, it was suggested that Intel has shown interest in producing Apple's mobile chips like the A5. Ars characterized that development as a "remote possibility," only if Apple could combine its low-power custom ARM designs with Intels' new three-dimensional 22nm transistor process.
post #2 of 68
An Intel partnership would be great technologically, but I suspect that it would be hard for them to come to an agreement on pricing, at least for now. In a few years, though, Intel might be in a weaker negotiating position and things could change. Of course, by then, Intel's technological lead over foundries like TSMC might not be as great, either.

As for Samsung, i can see why they think it makes more sense to favor their own line of Android devices over the business they get from Apple for components. But I suspect that they will ultimately regret that choice.
post #3 of 68
Aren't most of the displays from Samsung as well?
post #4 of 68
I suppose the rule of thumb here is don't get on Steves bad side.

A deal like this would be very lucrative for any of Samsungs fab competition.
post #5 of 68
Quote:
Originally Posted by Joseph L View Post

Samsung just copies Steve and rips him off. Why should he give them his business?

I'll be glad to know my new shiny Apple product has ZERO Samsung components.

Ah come on, everyone copies everyone especially in the IT industry.

Apple is sorting out their complaints in court as is their right, none the less their relationship with Samsung as a component supplier has been mutually benefitial and will likely continue.

Samsung is a huge organisation with multiple seperate departments and divisions.

Just because I don't like the lady that serves the tea in the office does not mean that I'm going to avoid any product that has association with Kenco!
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post #6 of 68
Pulling your business is how Apple can hit Samsung hardest.


Quote:
Originally Posted by saarek View Post

Ah come on, everyone copies everyone especially in the IT industry.

He's trolling; best to ignore him.
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post #7 of 68
I agree. Samsung makes displays and chips so they may think they can produce a device for lower cost and capture part of the market. However, judging by the track record of other tablets and the fact that android is fragmented and the marketplace isn't nearly as successful as the App Store, you'd think people would prefer a long-term device line up and innovative platform like iOS. I highly doubt Samsung will make billions in revenue to replace losing Apple's component business. Well, you can't win if you don't take risks. Problem is everyone wants Apples business (if they can handle the volume and speedy tech advances)
post #8 of 68
Quote:
Originally Posted by solipsism View Post

Pulling your business is how Apple can hit Samsung hardest.




He's trolling; best to ignore him.

I wonder how Samsung's profits from Galaxy Tabs etc. compare to what they will lose from Apple's business.
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post #9 of 68
Quote:
Originally Posted by Booga View Post

Aren't most of the displays from Samsung as well?

yes, Samsung or LG
post #10 of 68
Quote:
Originally Posted by digitalclips View Post

I wonder how Samsung's profits from Galaxy Tabs etc. compare to what they will lose from Apple's business.

Profits?!
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post #11 of 68
A6 chip... There goes another un-announced Apple product that Samsung won't get to see in advance
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post #12 of 68
Its a complicated business world and Apple is a very hard nosed supply buyer. They demand performance, quality, cost, responsiveness, secrecy, etc., and so they will change vendors. Could the law suits be playing a role, maybe, but the evidence is weak, correlation is NOT causation.
post #13 of 68
Just going from 45nm to 28nm would make the move worthwhile if the capacity and reliability (yield) were there, assuming that Samsung isn't likely to get to 28nm soon.

I would guess too, not knowing of course, that business divisions are such within Samsung, that there would be some pretty annoyed executives in the chip and display divisions if Apple moved just because of legal trouble between Apple and some mini-titan in the mobile devices division. \

All the best.
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post #14 of 68
Quote:
Originally Posted by island hermit View Post

Profits?!

Numbers can be negative you know But OK the mathematical difference between where they would have been and where it looks like they'll end up having not played nice with such a major client as Apple.
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post #15 of 68
Quote:
Originally Posted by gprovida View Post

Its a complicated business world and Apple is a very hard nosed supply buyer. They demand performance, quality, cost, responsiveness, secrecy, etc., and so they will change vendors. Could the law suits be playing a role, maybe, but the evidence is weak, correlation is NOT causation.

I recall a certain video graphic board maker that pissed off Steve a while back and the results. Perhaps those suspecting Samsung are getting a smack on the back of the head remember that too hence the suspicion of causation.
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post #16 of 68
Quote:
Originally Posted by AppleInsider View Post

Apple is expected to buy some $7.8 billion in components from Samsung this year.

8 bil is not chump change. You would think they would want to play ball with apple.
post #17 of 68
I'm sure Intel could get the contract if they tried hard enough.
post #18 of 68
The guys at the mobile device division must be in great trouble cause one thing is have a legal battle that can be costly but another is lose the parts business that has good profits and greater margin cause the volume compared to the mobile devices. Just a rumor like that should hit hard samsung stock. Right now they are on RED 2.0% bellow (Samsung Electronics Korea)
post #19 of 68
Quote:
Originally Posted by Blastdoor View Post

An Intel partnership would be great technologically,

But then folks would want to have Mac OS in the devices, especially the ipad, so they could be used like a real computer. Which Apple doesn't want.

As for this company change rumor, I think it is partially correct. I think that Apple is talking to another supplier. To compliment what they would get from Samsung. Component shortages are a major reason for unit shortages. Plus the March earthquake may have given them a lesson in the dangers of all your eggs in one basket. So I think that Apple will spread the wealth a little and try to have several places creating what they need in order to have a better time table. And yes it has the bonus that if Samsung keeps up their legal games etc, it will be easier for them to phase out said company from the supply chain

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post #20 of 68
Shoot, I actually enjoyed apple's dysfunctional relationship with Samsung. Apple had huge sway over samsung being their largest client, and samsung got to rip off some apple products. It was almost a win win.
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post #21 of 68
Great rumour. I hope this is true.
post #22 of 68
Quote:
Originally Posted by ascii View Post

I'm sure Intel could get the contract if they tried hard enough.

Moving to Intel would be a lot harder than going to another foundry like TSMC (or Chartered of Global Foundries).

One of the side effects of TSMC becoming so successful is that all other foundries (Samsung, Chartered, Global Foundries et al) all make themselves "T Compatible", i.e. they make sure their lines can run the same processes and hence are compatible with TSMC.

The knock on effect is that fabless chip companies, such as Apple, make sure their designs are "T Compatible" and can be run through pretty much any foundry.

Intel however are not T Compatible, since they have never pushed themselves as a foundry. It would be a huge effort for Intel to get fabs ready and able to run a non-Intel device. I can't see it to be honest, but that said, semiconductors is as odd place at the moment.
post #23 of 68
How about bringing production stateside? Use those billions on hand to be able to print 'Made In America' on iDevice boxes.
post #24 of 68
Why not go with AMD, ahem, Global Foundries?
post #25 of 68
My understanding from people in the SEMI industry the deal is done now, TSMC is gearing up to start cranking out the A5 chips for Apple. The other part of this which people are not talking about is the fact the A5 Chip also has in it Samsung Memory. Apple is moving away from Samsung memory to Hynix. By moving to TSMC will give apple more supply flexibility verse being tied solely to Samsung fabs as well as Samsung Memory.

I said this before, Apple is sending a clear message to Samsung and any other supplier, do not mess with Apple because the can change directing in no time. Samsung the Mother Ship will have decide and it maybe too late now whether loosing Apple as a $8B component customer is worth loosing over selling a few phones.
post #26 of 68
Could easily be the creation of a negotiating point. Sammy could lose bigger than they make by copying Apple's stuff.
post #27 of 68
Quote:
Originally Posted by AppleZilla View Post

How about bringing production stateside? Use those billions on hand to be able to print 'Made In America' on iDevice boxes.

Because people in Asia & Europe will really pay more for that sticker right? Apple will move production to the US the day that production in the US makes economic sense, and not a day sooner.
post #28 of 68
Quote:
Originally Posted by gprovida View Post

Its a complicated business world and Apple is a very hard nosed supply buyer. They demand performance, quality, cost, responsiveness, secrecy, etc., and so they will change vendors. Could the law suits be playing a role, maybe, but the evidence is weak, correlation is NOT causation.

Yup. Lawsuits probably had zero relation to this. Apple asks TMSC and Samsung to bid on A5 and A6 SoCs. TMSC comes in at a lower bid, with assurances for quality, quantity and schedule; Apple goes with TMSC.

I can pretty much guarantee that Apple did not burn its bridges with Samsung Semiconductor. What's going to happen if Apple wants more supply than TMSC can deliver? There's basically only 3 other choices: Intel, Samsung, and maybe some Japanese conglomerate.
post #29 of 68
Quote:
Originally Posted by Shrike View Post

Yup. Lawsuits probably had zero relation to this. Apple asks TMSC and Samsung to bid on A5 and A6 SoCs. TMSC comes in at a lower bid, with assurances for quality, quantity and schedule; Apple goes with TMSC.

Exactly, and in fact if the two bids were close apple may decide to split production between them in order to reduce risk - the problems in Japan after the tsunami demonstrated the advantages of being a bit more diversified. It may very well turn out that Apple is only moving a certain percentage of production across to TSMC.
post #30 of 68
It can cut both ways. If samsung is first to market with new technologies like quantum dot displays, Apple might not be given a look in if they want to use them if they piss-off Samsung too much.

Everyone seems to be ignoring the gorilla. There are very good reasons Apple have been using Samsung, they have been able to deliver quality and volume at competitive prices. Apple would have been using other suppliers if they could do better than Samsung.

So one or all of quality, price and volume are going to suffer. Apple might find it has to sacrifice it's profit margin a bit in order to move away from Samsung. Otherwise known as 'Cutting off your nose to spite your face.'
post #31 of 68
Quote:
Originally Posted by AppleZilla View Post

How about bringing production stateside? Use those billions on hand to be able to print 'Made In America' on iDevice boxes.

US residents would have to be willing to pay a premium for that sticker, something they've consistently shown no interest in doing.

American consumers care about the lowest cost possible, and while they might sign petitions saying stuff needs to be "Made in 'MERICA" they'll go and sign another petition soon after complaining about rising prices, and then they'll find the place that sells their products the cheapest (not looking where it comes from) and use the money they save to buy more worthless things.

American consumers have to value more than price for companies to start caring about more than price.
post #32 of 68
Quote:
Originally Posted by Menno View Post

US residents would have to be willing to pay a premium for that sticker, something they've consistently shown no interest in doing.

American consumers care about the lowest cost possible, and while they might sign petitions saying stuff needs to be "Made in 'MERICA" they'll go and sign another petition soon after complaining about rising prices, and then they'll find the place that sells their products the cheapest (not looking where it comes from) and use the money they save to buy more worthless things.

American consumers have to value more than price for companies to start caring about more than price.

Rubbish, Apple just need to open a fab plant and have the staff provided by US prisons. They could churn out product cheaper than foxcon.
post #33 of 68
Quote:
Originally Posted by cloudgazer View Post

Because people in Asia & Europe will really pay more for that sticker right? Apple will move production to the US the day that production in the US makes economic sense, and not a day sooner.

USA production makes sense to many corporations these days. With higher fuel prices and theft of in transit merchandise, companies are returning production to the USA because foreign manufacturing was costing more than they thought it would.

Apple seems to be a company that likes total control over things. Why not make it easier to control things by having its own factories in the USA? It should begin with assembly plants for its products and then begin making its components here. Perhaps simple component manufacturing like iPod bodies and Mac Book bodies could be done here. Those are done by computer controlled machines, so quality wouldn't change at all.

One thing that will be a big hold up in state side production of chips is China. China now refuses to export the Rare Earth metals needed for microchip production. They demand such metals are only used for finished products. It's a good move for them but a stumbling block for semiconductor manufacturers.

There are benefits to supporting one's own country. It would be a big PR win for Apple. It would make me more likely to purchase future Apple products and it would have the same effect on others.
post #34 of 68
Quote:
Originally Posted by Smallwheels View Post

USA production makes sense to many corporations these days. With higher fuel prices and theft of in transit merchandise, companies are returning production to the USA because foreign manufacturing was costing more than they thought it would.

Sadly, I don't see any signs that this is true. I wish it were, but there has not yet been an massive onshoring.
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post #35 of 68
Quote:
Originally Posted by Smallwheels View Post

Apple seems to be a company that likes total control over things. Why not make it easier to control things by having its own factories in the USA?

Apple decided a long time ago that control over manufacturing didn't mean it had to own factories, and that in fact it was better to outsource factories to firms that focused really hard on it. Same reason that Apple don't try to make their own LCD panels or their own DRAM. I can imagine Apple buying a big minority stake in Foxconn long before I can imagine them building their own factories again.

Quote:
There are benefits to supporting one's own country. It would be a big PR win for Apple. It would make me more likely to purchase future Apple products and it would have the same effect on others.

No, it would be a huge PR loss to Apple because it would piss Asian buyers off far more than it would please americans - who seem perfectly happy to buy Samsung/Toshiba/Toyota/etc.
post #36 of 68
That is BS. Toyota and Honda build cars here, and the pricing is competitive with cars built overseas. Further, many studies have been done to show the alleged cost savings. When American companies went overseas, the cost didn't drop on the products. The move was about greed. They wanted more profit margins, and less red tape. According to many studies, it actually isn't a great savings to build overseas because of issues like paying different types of taxes, like greasing the Communist parties hands.

Quote:
Originally Posted by Menno View Post

US residents would have to be willing to pay a premium for that sticker, something they've consistently shown no interest in doing.

American consumers care about the lowest cost possible, and while they might sign petitions saying stuff needs to be "Made in 'MERICA" they'll go and sign another petition soon after complaining about rising prices, and then they'll find the place that sells their products the cheapest (not looking where it comes from) and use the money they save to buy more worthless things.

American consumers have to value more than price for companies to start caring about more than price.
post #37 of 68
Quote:
Originally Posted by TBell View Post

That is BS. Toyota and Honda build cars here,.

They don't build here, they assemble here .... big difference.
post #38 of 68
Quote:
Originally Posted by Joseph L View Post

Samsung just copies Steve and rips him off. Why should he give them his business?

I'll be glad to know my new shiny Apple product has ZERO Samsung components.

It's not so simple.

Samsung makes RAM, NAND, displays AND batteries for Apple.

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post #39 of 68
Quote:
Originally Posted by stevetim View Post

8 bil is not chump change. You would think they would want to play ball with apple.

$ 8 Billion in a pool of $140 Billion is chump change.

Quote:
Originally Posted by ddawson100 View Post

Why not go with AMD, ahem, Global Foundries?

If Apple's goals is to get away from Samsung, they wont succeed. Samsung is one of the founders of Global Foundaries.

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post #40 of 68
Quote:
Originally Posted by Galbi View Post

If Apple's goals is to get away from Samsung, they wont succeed. Samsung is one of the founders of Global Foundaries.

No they aren't. GF were founded by combining AMD and Chartered (and a couple of other smaller fabs) and saying they are a foundry.

As a result, GF are part of an alliance including IBM, Samsung and previously AMD in developing process technology, but Samsung didn't found GF.
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