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Apple's rumored chip switch from Samsung to TSMC may send shockwaves through industry

post #1 of 76
Thread Starter 
Concerns are already arising in the semiconductor industry about Apple's potential switch from Samsung to TSMC for production of iPhone and iPad processors.

Supply chain sources indicated to DigiTimes that it is expected Taiwan Semiconductor Manufacturing Company will begin producing chips for Apple in 2013. The publication has a hit-or-miss track record reporting Apple's future plans, but is known for having sources in the Asian component making market.

In Wednesday's latest report, industry observers indicated that demand for chips from Apple is expected to be massive, with nearly 200 million CPUs for the iPhone and iPad needed every year.

Those orders are expected to require TSMC to need at least 200,000 12-inch wafers to meet demand from Apple. It's also reportedly caused concern among TSMC's current customers who are afraid they could be squeezed out if Apple takes up the bulk of TSMC's orders.

"TSMC's advanced process offerings serve the world's major fabless IC firms including Altera, Qualcomm and Nvidia," the report said. "While being capable of providing sufficient capacity to Apple, TSMC also does not want to upset its existing major clients, the observers noted. Allocating efficiently its production capacity will be a focus for the foundry in 2013, the observers believe."

Chips


Morris Chang, chairman and CEO of TSMC, recently indicated it could make sense for his company to dedicate as many as two entire fabrication plants to one company in order to supply enough chips. Some industry watchers interpreted those comments as a sign of a possible deal with Apple.

Rumors of a chipmaking deal between Apple and TSMC have persisted for some time, but Samsung remains the sole supplier of custom ARM-based processors for the iPhone, iPad, iPod touch and Apple TV. However, a growing rift between Samsung and Apple ? two companies that fiercely compete in numerous markets ? has increased chatter suggesting Apple plans to move its chip production away from Samsung.

One rumor out of Taiwan last month claimed Apple's future iOS devices could be powered by custom chips from TSMC as soon as late 2013. It was suggested that those processors could be quad-core chips based on a 20-nanometer manufacturing process.

Another rumor that surfaced in August claimed that Apple made an offer for around $1 billion that would have made TSMC a dedicated chip producer to Apple alone. The offer was allegedly rejected by TSMC, as the company was said to be interested in staying involved in the booming broader smartphone market.
post #2 of 76
If no shockwaves through industry it'll at least happen in this thread. People will likely touch on:

1. DigiTimes
2. Can a Samsung competitor create the high level of quality?
3. Samsung is doomed, loosing a $1B orders from Apple
4. Apple shouldn't have a single chip provider; SPOF
5. Will Apple shift to Intel chips?
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post #3 of 76
So really not the slightest proof Apple intends to 'switch from Samsung'.

Given Cook's past supply chain genius tactics, is it any wonder TSMC wouldn't have a bar of commiting to Apple? Fool me once...
post #4 of 76
They've been fighting in court forever so how exactly would Apple changing suppliers away from Samsung be shocking to anyone who's paid attention to this space?
post #5 of 76

Don't see why, Apple has been looking to drop Samsung for quite a while so was hardly unexpected. The companies that get pushed out can go knocking at Samsungs door as they will have a lot of spare capacity.

 

What's worth more to Samsung in over all profit, Apple's Business or their handset sales, anyone know?

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post #6 of 76
If this report is true then should Apple be burning the Samsung bridge?
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post #7 of 76
Not sure the fab industry doesn't see this coming. Samsung has screwed Apple over so many times it was inevitable. Apple was one of Samsung's biggest customers but the appeal of the mobile market was too great for Samsung to ignore. I roll my eyes when people complain about Apple's "big company tactics" comparing them to the Microsoft of the 90's. Samsung is a far worse a corporate citizen, and like other Asian conglomerates, are guilty of many more big company atrocities than Apple (e.g. labour practices, price cartels (LCD, DRAM))
post #8 of 76

TSMC better get it together.  I don't hear negative things about them, but demand is demand and it may get dicey.  

post #9 of 76

I'm sure Apple has been planning this for quite awhile

post #10 of 76

This, if happened, would be a bad shift. Seriously, that'd just mean current TSMC customers will order from Samsung instead of TSMC while Apple would order from TSMC. That means other customers (i.e. Android device manufactures) will get better chips than Apple. 

post #11 of 76
Quote:
Originally Posted by PhilBoogie View Post

If no shockwaves through industry it'll at least happen in this thread. People will likely touch on:
1. DigiTimes
2. Can a Samsung competitor create the high level of quality?
3. Samsung is doomed, loosing a $1B orders from Apple
4. Apple shouldn't have a single chip provider; SPOF
5. Will Apple shift to Intel chips?

Wow, you totally missed what I'm going to say. 

 

I think that if Apple wants an exclusive supplier, they need to find somebody with good technology but a small marketshare. Seems to me that's IBM. Apple should come to IBM and say "here's the deal -- we'll pay for all your fabs if you use them to make POWER chips for yourself, ARM chips for us, and nothing for anybody else." If they can get over their past, it could be a great partnership. 

post #12 of 76
Quote:
Originally Posted by cnocbui View Post

So really not the slightest proof Apple intends to 'switch from Samsung'.
Given Cook's past supply chain genius tactics, is it any wonder TSMC wouldn't have a bar of commiting to Apple? Fool me once...

I suspect you were trying to be sarcastic, but in fact Cook IS a supply chain genius.  Apple wouldn't be nearly as successful today without Cook's skills supporting Jobs' strengths.  If there's a supply chain Hall of Fame, Cook is a shoo-in for election in his first year of eligibility.

post #13 of 76

I dont think this would surprise anyone.  But it definitely steps the Apple-Samsung breakup up another level.  The $1billion lawsuit win already stepped things up another notch.  Loosing more $Billions in annual chip manufactering sales doubles down on that.

post #14 of 76
It is not an industry I know anything about, is it labor intensive? If not it seems Apple should looking to build it's own plant or at least partner with such a company and build it in the USA. I'm sure there could be incentives made available in many States for such a development.
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Been using Apple since Apple ][ - Long on AAPL so biased
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post #15 of 76
Quote:
Originally Posted by drobforever View Post

This, if happened, would be a bad shift. Seriously, that'd just mean current TSMC customers will order from Samsung instead of TSMC while Apple would order from TSMC. That means other customers (i.e. Android device manufactures) will get better chips than Apple. 

 

Aren't Samsung using TSMC made Qualcomm based chips in their LTE capable phones?

 

Oh, snap...

 

...dragon.

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post #16 of 76
Just as Samsung is set to begin a $4 Billion expansion in Austin.

http://gigaom.com/apple/samsungs-austin-plant-gets-overhaul-prep-for-new-iphone-ipad-chips/
post #17 of 76
Quote:
Originally Posted by drobforever View Post

This, if happened, would be a bad shift. Seriously, that'd just mean current TSMC customers will order from Samsung instead of TSMC while Apple would order from TSMC. That means other customers (i.e. Android device manufactures) will get better chips than Apple. 

 

What a load of nonsense.  

post #18 of 76

This sounds like the last step in a long, carefully executed series of steps towards moving away from Samsung as a supplier to me.  It's neither rash, nor unexpected (it's been in the planning stages for years), and Apple Insider has itself posted numerous articles about Apple trying to move to TSMC in the past.  

 

For those that say, "they need an exclusive supplier" ... they already asked (it's in the article that you didn't read very carefully).  

 

For those that say, "Samsung is the best, they need Samsung" ... they clearly aren't and TSMC has a long list of A-list customers (also mentioned in article). 

 

For those that say, "They should make them in the USA!" ... stupid, stupid, stupid.  (not even going to get into why as it's just too bleeding obvious). 

post #19 of 76
Samsung is the one burning its bridges.

Samsung should just make peace and take Apple's offer for a license to its patents and vice versa, just as it has done with Microsoft, just as HTC has done with Apple, etc. before Samsung got greedy - not wanting to pay anyone's including for its previous licenses, and stubbornly kept copying.
post #20 of 76
Quote:
Originally Posted by Gazoobee View Post

For those that say, "They should make them in the USA!" ... stupid, stupid, stupid.  (not even going to get into why as it's just too bleeding obvious). 

I thought they were already being made in the USA, and if Apple drops Samsung they won't be anymore. It'll be China, Taiwan, or Camas, WA, USA

http://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants
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post #21 of 76
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Originally Posted by saarek View Post

Don't see why, Apple has been looking to drop Samsung for quite a while so was hardly unexpected. The companies that get pushed out can go knocking at Samsungs door as they will have a lot of spare capacity.

What's worth more to Samsung in over all profit, Apple's Business or their handset sales, anyone know?

They are a mutinational conglomerate. Most such organizations allow, enable and encourage every "division" to grow and expand. There are not many chapters in history when a conglomerate sacrificed one company to help another thrive, unless the sacrificial lamb is small. In this case, both the smartphone and the semiconductors division are in the top echelon of their respective industries. I suspect they are trying their best to convince Apple that the operations are independent.
post #22 of 76
Quote:
Originally Posted by Gazoobee View Post

For those that say, "They should make them in the USA!" ... stupid, stupid, stupid.  (not even going to get into why as it's just too bleeding obvious). 

Do you have idea that you are the one being stupid, stupid, stupid with this statement?

And the first two statements are respectively stupid and stupid, stupid.

Change them before too many people see it. It's quite embarrassing.
post #23 of 76

deleted


Edited by MacRulez - 1/28/13 at 8:36pm
post #24 of 76
Originally Posted by ankleskater View Post
Change them before too many people see it.

 

Seems stupid to say that, given that you've quoted it.

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post #25 of 76
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Originally Posted by jameskatt2 View Post

Samsung is the one burning its bridges.
Samsung should just make peace and take Apple's offer for a license to its patents and vice versa, just as it has done with Microsoft, just as HTC has done with Apple, etc. before Samsung got greedy - not wanting to pay anyone's including for its previous licenses, and stubbornly kept copying.

You must think that Samsung is a small company.
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post #26 of 76
GlobalFoundries who has TSMC partnering with them will be absorbing leakage demand from Apple and other customers.

For the fastest growing Fab corporation in the globe it's amazing it gets zero rumor press.
post #27 of 76
Quote:
Originally Posted by Gazoobee View Post

For those that say, "They should make them in the USA!" ... stupid, stupid, stupid.  (not even going to get into why as it's just too bleeding obvious). 

Aren't the chips currently made in the USA?

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post #28 of 76
Quote:
Originally Posted by wcg66 View Post

...Apple was one of Samsung's biggest customers but the appeal of the mobile market was too great for Samsung to ignore. ...

Samsung were making phones long before Apple. If anything, It's Apple that couldn't resist the appeal of the mobile market.
post #29 of 76
At some point, I expect Apple to become more vertically integrated by partnering/buying a piece of a memory manufacturer and chip manufacturer. It makes perfect sense, they will then get lower cost components and always be #1 with the FAB. Apple's got plenty of bank to make this happen.
post #30 of 76

My guess is that the reason Samsung is outselling the other Android manufacturers is that Samsung has the capacity to produce enough ARM processors, whereas the others are vying for them from other suppliers. This is the only real way to make sense of what's happening in the Android world: there's a supply constraint which is affecting everyone else but not Samsung. Processor fabrication seems like a likely candidate. If this is the case, then it's likely that the only reason Samsung has this advantage is because they had to build out capacity early on because of their contract with Apple. So Apple essentially handed them this advantage. I think that's why the relationship between Samsung and Apple is particularly bad now. Switching now probably won't make a lot of difference though.

post #31 of 76
Quote:
Originally Posted by mstone View Post

Aren't the chips currently made in the USA?

 

I was just listing the stupid knee-jerk arguments that were sure to come up, this being one of them.  

 

In the case of chip fabs that are automated I suppose the argument isn't as ridiculous as it is in most other cases but I'm no manufacturing expert.  Generally speaking "made in USA" is a bad thing for most consumers and just isn't going to happen for most manufacturing.  

post #32 of 76
Quote:
Originally Posted by ankleskater View Post


Do you have idea that you are the one being stupid, stupid, stupid with this statement?
And the first two statements are respectively stupid and stupid, stupid.
Change them before too many people see it. It's quite embarrassing.

 

See my response to "mstone." I forgot that chip fabs are mostly automated and thus partly excluded from the stupidity of "manufacturing things in the USA" argument.  

 

As to the first two points, you're going to have to actually come up with something as to why I'm "stupid, stupid, stupid" (bonus points for those that know the origin of the quote), as an argument consists of more than just the automatic gainsaying of the other persons statement.  

post #33 of 76
Quote:
Originally Posted by Gazoobee View Post

 I forgot that chip fabs are mostly automated and thus partly excluded from the stupidity of "manufacturing things in the USA" argument. 

There is more than one way to look at the made in USA situation. Up until a couple decades ago when manufacturing started shifting to Asia, virtually anything could be made in the USA which provided us with a very diversified manufacturing base. Diversification is a good thing as any financial advisor will tell you. From a long term perspective losing our manufacturing base leaves us more vulnerable to foreign manipulation and could ultimately affect our national security. When many of the parts for our defense systems contain electronics from abroad it is not exactly a comforting feeling given the current political unrest in the world.

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post #34 of 76
..
Edited by ankleskater - 11/28/12 at 9:18am
post #35 of 76
Quote:
Originally Posted by drobforever View Post

This, if happened, would be a bad shift. Seriously, that'd just mean current TSMC customers will order from Samsung instead of TSMC while Apple would order from TSMC. That means other customers (i.e. Android device manufactures) will get better chips than Apple. 

Since The ARM chips Samsung makes for other Android OEMS are basic standard models that anyone can buy or make, why would Android OEMs get "better" chips.

Apple has been customizing their ARM chips because they have a special license that allows them to do that. HTC and other OEMs have to buy whatever Samsung or TSMC makes.

If you read Anandtech, you'll see that Apple has the "better chips" and can make them with whatever foundrys they choose.

The Downside for android OEMs buying ARM from Samsung, the OEMs can't purchase in the quantity that Apple does, so they may have to pay more for the ARM chips than they presently do with TSMC.

Samsung will make more profits with selling ARM chips and that will hurt other Android OEMs.

They reality is exactly the opposite of what you postulated.
post #36 of 76
Quote:
Originally Posted by saarek View Post

Don't see why, Apple has been looking to drop Samsung for quite a while so was hardly unexpected. The companies that get pushed out can go knocking at Samsungs door as they will have a lot of spare capacity.

What's worth more to Samsung in over all profit, Apple's Business or their handset sales, anyone know?

/sarcasm on
Well, seeing as how they rely on Apple's business to provide them with designs for their handset business, I'd say that is more important to them!
/sarcasm off
post #37 of 76

I am not sure I believe many of these stories.  It think Apply would put a tighter lid on this kind of stuff that it does it's product development.  These kind of leaks could really hurt Apple's business.  Like it or not,  Apple cannot produce most of their mobile products without Samsung. 

 

As for how bad this will hurt Samsung, it is any one's guess.  Typically companies like Apple squeeze suppliers very hard.   They cut their profits margins to nearly nothing.  1 billion is sales might be very little profit for Samsung.  If Apple completely dumps Samsung, it will certainly hurt them, but might not affect their profits as much as many here seem to think.

 

At this moment, I think Apple needs Samsung more that Samsung needs Apple....

post #38 of 76
Re: "Another rumor that surfaced in August claimed that Apple made an offer for around $1 billion that would have made TSMC a dedicated chip producer to Apple alone."

Apple should offer $1 billion (or more) toward the construction of an all-new fab for AX chip production. TSMC wouldn't need to use any existing capital equipment to make the Apple chips. They would just need to hire and train new workers (and probably transfer workers from other fabs to the "Apple fab" temporarily, until the new hires get up to speed.)

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post #39 of 76
Other than Samsung, who in the industry has rising concerns about Apples rumored move to Taiwan Semi? Talk about sensationalizing news, err rumor!
post #40 of 76
I think you underestimate just how huge Apples demands are volume wise. Further this might not just be a move to jump away from Samsung but rather to solve the all of your eggs in one basket problem. As demonstrated by the article we are talking about volumes that employ multiple factories. As such you need to diversify just to cover your butt from natural problem much less man made ones.

As it is I could see Apple partnering with TMSC and other suppliers to make sure the supply chain is secure and diverse.
Quote:
Originally Posted by PhilBoogie View Post

If no shockwaves through industry it'll at least happen in this thread. People will likely touch on:

1. DigiTimes
2. Can a Samsung competitor create the high level of quality?
Actually I have zero doubt here. You make an assumption here that Apples success with its pricessors is Samsungs doing when in fact much of the tech is licensed to Samsung.
Quote:
3. Samsung is doomed, loosing a $1B orders from Apple
Expect huge layoff in the manufacturing arm. This will be very public too as some of that production is in the US.
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4. Apple shouldn't have a single chip provider; SPOF
No they shouldn't. At the very least they need to avoid production coming from one plant or geographical area. The volumes we are talking about here are massive and as such a little CYA is needed. Just imagine if all production was in NYC a month of sales could have been lost.
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5. Will Apple shift to Intel chips?
[/Quote]
Not a chance. I would expect Apple to build their own plants first.
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