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Complex chip shift from Samsung expected to take Apple 12-18 months

post #1 of 100
Thread Starter 
For Apple to move production of its iPhone and iPhone and iPad chips away from Samsung would be a long, difficult process with only three realistic alternative companies.

As speculation grows that Apple plans to take its chip business away from Samsung, analyst Amit Daryanani decided to take a closer look at Apple's options. He views it as a long-term project that may not occur until 2014.

"Shifting chip manufacturers isn't easy and requires a complete redo of production and manufacturing process," Daryanani wrote in a note to investors on Friday. "Hence, these changes will take 12-18 months at minimum and won't be commercially sold 'til 2014."

In his eyes, there are two most likely companies for Apple to turn to: Intel and Taiwan Semiconductor Manufacturing Company. TSMC has long been rumored to be a likely partner for Apple if it moves chip production away from Samsung, while Intel has indicated it would like to build custom processors for Apple's iPhone and iPad.

A6X


The case for Intel is that it has three foundry partners and is currently ahead of ARM in development by 1.5 generations. But Apple's iOS platform is already heavily invested in ARM, which would make a transition to Intel's chips more difficult.

That's where TSMC comes in, which Daryanani said could begin manufacturing chips for Apple in 2014, as soon as they transition to their 20-nanometer production process. He believes TSMC would need capital expenditures of between $1 billion and $3 billion, which would give Apple an opportunity to co-invest and ease the company's burden.

Another potential ? but less likely ? partner for Apple would be Global Foundries, a company that is already working with ARM to build 20-nanometer chips based on ARM's reference designs. Daryanani said it's possible that Apple could co-invest to ramp up dedicated fabrication plants with them for production, though TSMC and Intel are seen as more likely options.

Finally, Daryanani said Apple could "go vertical," and opt to build their own chip fabrication plants. He views this as an unlikely option, as Apple mostly keeps design elements in-house and hands off manufacturing to outside partners.

One report this week claimed that technology industry insiders in the Far East believe TSMC could begin building custom chips for Apple as soon as late 2013. Such a transition away from Samsung is expected to have shockwaves through the industry.

Apple's transition has become expected as the company faces a growing rift with rival Samsung, which currently builds all of the custom processors found in the iPhone, iPad, iPod touch and Apple TV. While the two companies partner on supplies, Apple and Samsung are fierce rivals in the smartphone, tablet and computer markets, among others.
post #2 of 100
I hope the truth is Tim is much further along the planning path than those guessing realize.
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post #3 of 100
So, IOS might have a chip redo, hopefully Apple does the chip, If another company does it,IOS on the chip might cause errors.
post #4 of 100
Now we know why Steve never wanted to do this vindictive move even though Samsung was gnawing away the hand that fed them... Apple still needed the chicken!

Let's see the options...

TSMC, not the smoothest experience whenever fabbing with them. Ask Nvidia over the past several years.

Intel... And Intel is suddenly going to make ARM how? Is it even an option?

Not looking good.

More production problems await.

And you thought the past six months were "off"...
post #5 of 100
Amit is as credible as his suggestion about Intel taking over chip production.
As credible as a factor 10 price hike and a factor 5 in power dissipation.

J.
post #6 of 100
Quote:
Originally Posted by jnjnjn View Post

Amit is as credible as his suggestion about Intel taking over chip production.
As credible as a factor 10 price hike and a factor 5 in power dissipation.
J.

Bingo. Intel. LOL. Nonsensical, isn't it.
post #7 of 100
Quote:
Originally Posted by sr2012 View Post

Now we know why Steve never wanted to do this vindictive move even though Samsung was gnawing away the hand that fed them... Apple still needed the chicken!
Let's see the options...
TSMC, not the smoothest experience whenever fabbing with them. Ask Nvidia over the past several years.
Intel... And Intel is suddenly going to make ARM how? Is it even an option?
Not looking good.
More production problems await.
And you thought the past six months were "off"...

 

Apple is doomed. Yes, we know that already. Tell us something we don't know.

post #8 of 100
blah,blah,blah... the 20nm ipad chips will be in the new ipad in 2013 (october) or 2014 (march)...

i wonder what samsung going to do... they have to come up with a non-copied phone/tablet for the next 18 months (due to the 2014 patent case)... or perhaps samsung will just "Rest on their laurels" LOL...
post #9 of 100
Originally Posted by haar View Post
blah,blah,blah... the 20nm ipad chips will be in the new ipad in 2013 (october) or 2014 (march)...
i wonder what samsung going to do... they have to come up with a non-copied phone/tablet for the next 18 months (due to the 2014 patent case)... or perhaps samsung will just "Rest on their laurels" LOL...

 

All they have to do is make "N" models of their existing crap that also look exactly like Apple designs (just different designs than the ones in the case). 

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

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Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

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post #10 of 100
Going vertical can't be the option, as it's not in Apple's philosophy.
They have always followed a "make AND buy" paradigm, which means that they develop the core competencies internally and acquire secondary competencies outside. That is: development of products is done inside the company, while manufacturing is done outside by partners (the "specialization socialization" logic).

Anyway, Intel may produced chips for Apple using the ARM architecture too! Intel is a licensee of ARM, and used to make ARM chips in the past...
post #11 of 100

It is a shame Apple can't get Intel to do foundry work, which would be profitable for Intel and beneficially for Apple. No way Apple is dropping ARM. It has too much invested, and it gives Apple greater control over its product.

 

Nonetheless, I am guessing Apple will keep Samsung on board for current chips, but will try to switch for the next major release of the A series processors. 

post #12 of 100
Quote:
Originally Posted by sr2012 View Post

Now we know why Steve never wanted to do this vindictive move even though Samsung was gnawing away the hand that fed them... Apple still needed the chicken!
Let's see the options...
TSMC, not the smoothest experience whenever fabbing with them. Ask Nvidia over the past several years.
Intel... And Intel is suddenly going to make ARM how? Is it even an option?
Not looking good.
More production problems await.
And you thought the past six months were "off"...

 

Intel could easily make ARM.  All they need are the process steps (recipes) and with a bit of development could be banging out ARM chips inside 6 months.  I think it's unlikely though.  Intel's manufacturing processes are really first class - industry leading, but they are not really suited to being a foundry, where cost is a key driver.

 

TSMC are a quality company.  They have had some glitches with NVidia, but that could (and probably is) be a problem with NVidia and their design as much as it is TSMCs manufacturing capability.

 

Global Foundries would be interesting.  They've build a hell of a big fab in New York state, and will need something to run through it, although they come with the baggage of what used to be Chartered Semi, and they are a joke.  If Apple work with GF, they would want to insist on their devices not being made in the Singapore fab.

 

As for the option of Apple doing it all themselves, I just don't ever see that happening.  It would cost them far too much money to acquire the expertise to even make a start on building a fab and in reality, the foundry market is so competitive that it's unlikely Apple would ever be able to make it cost effective.

post #13 of 100

OMG what a load of crap.  Why would anyone choose to include the ridiculous speculation about Apple moving to intel chips in an article that was ostensibly about moving to a different foundry or fab???  Is anyone even thinking at all when they write this tripe?  

post #14 of 100
This isn't as difficult as some believe. Look at the way Apple moved to 32nm. They gave Samsung chips to make for the older iPad 2 first, to work out any bugs. That went well, so they then moved over the rest of their production for the next generation. So that can give TSMC time to get production to where it is needed. Apple just gives them a chip for one model first, say, an older iPhone and iPad, which could be the A6 at that time. Then, they could transition over to the newer model chips when ready.

This isn't an all or nothing move. Samsung could continue producing until TSMC is in full production.

Unlike what some people have been saying, Samsung isn't going to throw Apple under the train. They would get in too much trouble for that.

As far as Intel goes, yes, they'd love to produce a custom x86 chip for Apple, who wouldn't? But if Apple came to them and said that they would want Intel to produce 300 million custom ARM chips for them, Intel might be willing to do that as well. If the alternative is nothing, that could look like. Very good deal.

Global Foundries is another case entirely. I don't believe they could produce enough chips for Apple's needs. Though, they will be building a new foundry in upstate NY. It's not a company I would consider.
post #15 of 100
Intel would be my choice.

Intel is much more aggressive in building up performance. It's new x86 chips for smartphones are close to ARM's low energy needs yet are more powerful.

Intel is a licensee of ARM. It has built ARM chips before.

Currently, its x86 chips have gained ZERO interest in the smartphone and tablet computing market.

Thus Intel's choice is either to make nothing and keep losing or to start making ARM chips also in partnering with Apple to gain marketshare back. The profits may be slimmer on ARM but they are present.

Intel certainly wouldn't stab Apple in the back like Samsung does.

Apple can certainly invest with Intel in building new chip foundaries dedicated to ARM production - just as Samsung invested in building a foundary in Texas. This way, Intel doesn't have to lose production on its current x86 chip foundaries.

By producing ARM chips with Apple and continuing to sell x86 chips to Apple, an Apple-Intel partnership would be lucrative to Intel.

If anything, Apple has pushed Intel to be the best it can be and forces it to continue to be competitive.

The only fly in the ointment is that Intel has been a slug in developing new versions of its XEON processors. This is why the new Mac Pro has been delayed delayed delayed.
post #16 of 100

I dunno why this analyst is so clueless.  UMC also has 28nm, 20nm and 14nm fab plans AND needs capital to the point they are willing to sell 10% interest in exchange for guaranteed capacity.  UMV licensed IBM's 14nm FinFET just like GlobalFoundries and Samsung.

 

The kicker is whether Qualcomm has already locked up all the near term UMC capacity.  

 

No shit 2014 for 20nm.  However, it is possible that these fabs can start producing for Apple on 28nm in 2013 given no one besides Apple and the fabs know how far along they are in the transition process.

post #17 of 100
Quote:
Originally Posted by EgoAleSum View Post

Going vertical can't be the option, as it's not in Apple's philosophy.
They have always followed a "make AND buy" paradigm, which means that they develop the core competencies internally and acquire secondary competencies outside. That is: development of products is done inside the company, while manufacturing is done outside by partners (the "specialization socialization" logic).
Anyway, Intel may produced chips for Apple using the ARM architecture too! Intel is a licensee of ARM, and used to make ARM chips in the past...


Apple may have no other choice but to start manufacturing its own chips.

 

If they move away from Samsung and then are f*cked over by their new partner... what then?!

 

I believe Apple would have a long hard fall from which it might never fully recover.

 

The devil you know.


Edited by island hermit - 11/30/12 at 8:52am
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post #18 of 100
It might take 12 to 18 months... and then again, they might have started 12 months ago!
post #19 of 100
Quote:
Originally Posted by island hermit View Post


Apple may have no other choice but to start manufacturing its own chips.

If they move away from Samsung and then are f*cked over by their new partner... what then?!

I believe Apple would have a long hard fall from which it might never fully recover.

The devil you know.

It takes time to come up to speed in process technology. Apple has no recent experience in this. Intel has the best fabs. Everyone else has many more problems. If Apple began their own, it could take two years before the fab was complete. But they would have to hire a large number of people expert in this away from others. What is the guarantee they could get a talented and cohesive team together in that time? Then the fab would need to undergo testing. It could be more than two years down the road, possibly three.

But they would have to upgrade their fab with every process generation. It's estimated from Intel's numbers, that a new 22nm fab costs about $8 billion. Is this really the best way for Apple to be spending its money? Could they break even on this venture? I don't see it.
post #20 of 100
I think 24 months is optimistic... Apple demands extremely high quality on a very low margin. It take a lot of time and scale to achieve a result that can meet Apple's demands and still make any kind of profit for the component supplier.

Case in point the iPad Mini. Apple shifted away from Samsung for the displays and now they are having supply issues due to low yields. This caused a revision in the sales forecast from 10 million to 6 million. So these types of moves are not without risk...

Many companies drool over a big OEM contract. However, once they get it, they find out that it is hard to even break even on the contracts. Samsung was able to do this for Apple because of their huge and diverse manufacturing base.

It will be interesting to see how this all works out....

P.S. Just got a Verizon LTE iPad Mini....Easily the best damn iPad yet!! As for the people whining about the display, get over it...It looks fine...
post #21 of 100
Quote:
Originally Posted by island hermit View Post


Apple may have no other choice but to start manufacturing its own chips.

 

If they move away from Samsung and then are f*cked over by their new partner... what then?!

 

I believe Apple would have a long hard fall from which it might never fully recover.

 

The devil you know.

I guess you've never taken any business class, have you?

Apple is a huge corporation and requires huge production volumes (with high quality standards). They can't simply say "ok, tomorrow we'll build a factory to produce our own chips"!

They simply can't do that, because they don't know how to do that. And they wouldn't have economies of scale nor economies of learning (hope they are the correct terms in English). Also, owning plants means having a more rigid cost structure, etc etc. There are thousands of reasons why it's not possible for a company like Apple to manufacture their own devices. Really!

 

The new partner (and not even Samsung) can't f**k (as you say) them, simply because they have a contract. And because a contract for millions of chips every year is too important.

 

Samsung will never f**k Apple either. If Apple wishes to change partner, it's just because they don't want Samsung to *learn* from them!

In fact, when Samsung produces a new CPU for Apple, they have to work (together, often) on many different things, to solve issues etc... This means that, even if Samsung can't copy Apple designs, they are still acquiring knowledges, which is fundamental in today's world. "Knowledge" here means "know-how", being able to solve issues, knowing how it's best to do something, acquiring experience (see economies of learning), etc: it's all tacit knowledge, but it's very valuable.

post #22 of 100
Quote:
Originally Posted by EgoAleSum View Post

I guess you've never taken any business class, have you?

Apple is a huge corporation and requires huge production volumes (with high quality standards). They can't simply say "ok, tomorrow we'll build a factory to produce our own chips"!

They simply can't do that, because they don't know how to do that. And they wouldn't have economies of scale nor economies of learning (hope they are the correct terms in English). Also, owning plants means having a more rigid cost structure, etc etc. There are thousands of reasons why it's not possible for a company like Apple to manufacture their own devices. Really!

 

The new partner (and not even Samsung) can't f**k (as you say) them, simply because they have a contract. And because a contract for millions of chips every year is too important.

 

Samsung will never f**k Apple either. If Apple wishes to change partner, it's just because they don't want Samsung to *learn* from them!

In fact, when Samsung produces a new CPU for Apple, they have to work (together, often) on many different things, to solve issues etc... This means that, even if Samsung can't copy Apple designs, they are still acquiring knowledges, which is fundamental in today's world. "Knowledge" here means "know-how", being able to solve issues, knowing how it's best to do something, acquiring experience (see economies of learning), etc: it's all tacit knowledge, but it's very valuable.

 

Am I talking about next year? Obviously you assumed so. We all know about assuming. I'm talking at the very least 6 years down the road.

 

Apple didn't know how to do a lot of things, but it learned. You said it yourself, that Samsung "learns" from Apple. Maybe Apple should learn themselves right into the chip business. Apple could buy its way slowly into fabrication.

 

You say that Apple doesn't want Samsung to learn from them. What about the next guy? Will they not also be learning from Apple.

 

As far as contracts go... ha! Contracts aren't worth shit if your manufacturing partner f*cks up on the fab and has to pull a line to re-jig it. You said it yourself... Apple has huge demands and you can't learn how to cope with these demands overnight. Right now Apple knows Samsung's capabilities. Samsung learning from Apple might be the least of Apple's worries. You, being the business genius that you are, should know that.

 

Getting f*cked over by your suppliers can mean a lot more than just breaking contracts.


Edited by island hermit - 11/30/12 at 9:49am
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post #23 of 100

Why choose?

 

Apple's been ramping up so much and has so much capital that they can afford to-- and probably need to-- have multiple suppliers.  I wouldn't be surprised to see TSMC, Global Foundries, and Samsung all producing chips in volume for Apple.

 

Intel used to own StrongARM but divested it a long time ago.  It would be a pretty strategic decision for Intel to start manufacturing ARM again, and since I doubt they've made that decision and it would take a year or two to start once they do... don't hold your breath there.

post #24 of 100
Quote:
Originally Posted by melgross View Post


It takes time to come up to speed in process technology. Apple has no recent experience in this. Intel has the best fabs. Everyone else has many more problems. If Apple began their own, it could take two years before the fab was complete. But they would have to hire a large number of people expert in this away from others. What is the guarantee they could get a talented and cohesive team together in that time? Then the fab would need to undergo testing. It could be more than two years down the road, possibly three.
But they would have to upgrade their fab with every process generation. It's estimated from Intel's numbers, that a new 22nm fab costs about $8 billion. Is this really the best way for Apple to be spending its money? Could they break even on this venture? I don't see it.

 

I think that Apple will have no other choice but to buy its way into the fab business. Production volume is getting too massive. Apple is at a f*cked if you do, f*cked if you don't crossroads. Chip fab is the weak link in Apple's chain. Will Apple ever get what it really needs from another manufacturer? I doubt it. At the very least Apple needs more control over the fab plant and its not going to get it unless it buys the plant.

 

This aint your Grandpa's Apple...


Edited by island hermit - 11/30/12 at 11:15am
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post #25 of 100
Yeah, Apple will build new manufacturing in California so our devices will all start saying "Designed and manufactured in California. Bitches" "1smile.gif
post #26 of 100
Quote:
Originally Posted by island hermit View Post

I think that Apple will have no other choice but to buy its way into the fab business. Production volume is getting too massive. Apple is at a f*cked if you do, f*cked if you don't crossroads. Chip fab is the weak link in Apple's chain. Will Apple every get what it really needs from another manufacturer? I doubt it. At the very least Apple needs more control over the fab plant and its not going to get it unless it buys the plant.

This aint your Grandpa's Apple...

I tend to agree with you on all points here .. especially the last comment!
Edited by digitalclips - 12/1/12 at 5:54am
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post #27 of 100
Re: "Such a transition away from Samsung is expected to have shockwaves through the industry."

Really? Headlines yes. Shockwaves only through Samsung's chip division.

And presumably, Samsung would continue to make older AX chips like the A5 / A5X / A6 / A6X for a few years. So the total transition away from Samsung for all AX manufacturing business would take 2 or 3 years after the TSMC chips (A7 / A7X ?) volume production begins.

I wouldn't be surprised if the A7 / A7X will be 64-bit dual / quad core designs. Dual core for iPhone, iPad, iPod touch, Apple TV. Quad core for MacBook Air running OS X 10.9.

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post #28 of 100

One factor that will undoubtedly also play a role is that during the transition, the chips from Samsung could get significantly more expensive because of the loss of volume. It would surprise the hell out of me (and I DO know something about supply chain management) to find that the price is not linked to volume by some calculation that had been agreed in advance. That is normal practice. 

 

Take an example: If you agree to a delivery target it would be insane to allow the client to vary the ordered volume at will. For example if a plant is running at capacity and the customer wants do double the order: No go. You have to build a new Fab. That takes major investment and time planning. In the other direction, if you build a Fab to meet a customer's projected demand, you won't want to reduce the guaranteed order volume before the Fab is amortized.

 

Companies just do not get themselves into that situation and survive, and as I said it would amage me if such a price-volume coupling isnt in the contracts. Getting out of a contract is also not as easy as you make believe. That certainly involves lawyers. You can't just say "I changed my mind". Forget it.

 

So if the fab is paid for then Samsung can probably absorb the production capacity by diverting to their own processors and letting the output flow into the internal vertical supply chain. That will reduce their costs at the same time as it makes Apple's costs rise. Samsung is probably not losing too much sleep about the apple theatricals at this point, particularly considering the amazing demand for Samsung's own products.

 

Life is mostly not as simple as one would like it to be.

post #29 of 100
Quote:
Originally Posted by EgoAleSum View Post

There are thousands of reasons why it's not possible for a company like Apple to manufacture their own devices. Really!

 

And there are over $100 billion reasons they can.  

 

The market cap of several of the pure-play foundries are in the single digit billion range.  For example UMC is only $4.7B and is sometimes the rumored takeover target of Qualcomm.  Of course they NEED about another $8B (if I recall correctly) in CAPEX to get to the 20nm process.  TowerJazz is only 181M if all apple wants is to acqui-hire a company that is already in the foundry business (although not in the CPU one they are a ARM licensee) to manage new fabs.  That's a longer road than buying UMC but UMC has a asston of 40nm stuff Apple probably can't use.

 

Qualcomm is in the same boat.  They need more capacity than TSMC is willing to promise.

 

On the other hand, even AMD/ATI is fabless after spinning off Global Foundries.

post #30 of 100
Quote:
Originally Posted by Taniwha View Post

Samsung is probably not losing too much sleep about the apple theatricals at this point, particularly considering the amazing demand for Samsung's own products.

 

Life is mostly not as simple as one would like it to be.

 

Not for the short term.  But if Apple injects a few billion and technology into a competitor and it becomes a long term headache.  For more likely for displays than CPUs.

post #31 of 100
Quote:
Originally Posted by nht View Post

 

And there are over $100 billion reasons they can.  

 

The market cap of several of the pure-play foundries are in the single digit billion range.  For example UMC is only $4.7B and is sometimes the rumored takeover target of Qualcomm.  Of course they NEED about another $8B (if I recall correctly) in CAPEX to get to the 20nm process.  TowerJazz is only 181M if all apple wants is to acqui-hire a company that is already in the foundry business (although not in the CPU one they are a ARM licensee) to manage new fabs.  That's a longer road than buying UMC but UMC has a asston of 40nm stuff Apple probably can't use.

 

Qualcomm is in the same boat.  They need more capacity than TSMC is willing to promise.

 

On the other hand, even AMD/ATI is fabless after spinning off Global Foundries.

 

As margins get tighter the number of chip fabs that can keep up will get smaller. Even five years years from now Apple could be in serious trouble. Apple's biggest competitor, Samsung, is one of the few mobile players, if not the only one, that can manufacture chips in house. Can Apple continue business as usual or is a serious shift needed at this time. I believe that Apple is right on the cusp of serious change. These are the sort of decision points in a company's history that can either make it or break it.

 

Over the next few years Apple needs to get right up Samsung's ass.

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post #32 of 100
Quote:
Originally Posted by melgross View Post

If Apple began their own, it could take two years before the fab was complete. But they would have to hire a large number of people expert in this away from others. What is the guarantee they could get a talented and cohesive team together in that time? Then the fab would need to undergo testing. It could be more than two years down the road, possibly three.
 

 

If Apple needs to go down this road the sooner started the better.  TI is going to cut 1700 jobs as they move away from OMAP.  If they aquihire a functioning fab management team to build a new fab in texas it could work.

post #33 of 100
Quote:
Originally Posted by island hermit View Post

Quote:
Originally Posted by nht View Post

 

And there are over $100 billion reasons they can.  

 

The market cap of several of the pure-play foundries are in the single digit billion range.  For example UMC is only $4.7B and is sometimes the rumored takeover target of Qualcomm.  Of course they NEED about another $8B (if I recall correctly) in CAPEX to get to the 20nm process.  TowerJazz is only 181M if all apple wants is to acqui-hire a company that is already in the foundry business (although not in the CPU one they are a ARM licensee) to manage new fabs.  That's a longer road than buying UMC but UMC has a asston of 40nm stuff Apple probably can't use.

 

Qualcomm is in the same boat.  They need more capacity than TSMC is willing to promise.

 

On the other hand, even AMD/ATI is fabless after spinning off Global Foundries.

 

As margins get tighter the number of chip fabs that can keep up will get smaller. Even five years years from now Apple could be in serious trouble. Apple's biggest competitor, Samsung, is one of the few mobile players, if not the only one, that can manufacture chips in house. Can Apple continue business as usual or is a serious shift needed at this time. I believe that Apple is right on the cusp of serious change. These are the sort of decision points in a company's history that can either make it or break it.

 

Over the next few years Apple needs to get right up Samsung's ass.

Yes, but that's why I think when the theatrics are over, business sense will prevail. 

 

I don't think Apple can survive long-term with ANY single-source supplier. Whether Samsung is or is not one of the multi-source suppliers is more of a risk-factor for Apple than for Samsung. We shouldn't forget that Samsung is the #1 Chip Fab worldwide and try as they might, the Taiwanese cannot compete.

 

As I suggested elsewhere, I think the Apple-Samsung scrap is actually a side-show. The REAL threat to Samsung but also to Apple are in fact the mainland chinese, not the Taiwanese.

post #34 of 100
Quote:
Originally Posted by jameskatt2 View Post

Intel certainly wouldn't stab Apple in the back like Samsung does.
 

 

You wanna buy an ultrabook...

 

...inspired by Intel.

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post #35 of 100
Quote:
Originally Posted by nht View Post

 

And there are over $100 billion reasons they can.  

 

The market cap of several of the pure-play foundries are in the single digit billion range.  For example UMC is only $4.7B and is sometimes the rumored takeover target of Qualcomm.  Of course they NEED about another $8B (if I recall correctly) in CAPEX to get to the 20nm process.  TowerJazz is only 181M if all apple wants is to acqui-hire a company that is already in the foundry business (although not in the CPU one they are a ARM licensee) to manage new fabs.  That's a longer road than buying UMC but UMC has a asston of 40nm stuff Apple probably can't use.

 

Qualcomm is in the same boat.  They need more capacity than TSMC is willing to promise.

 

On the other hand, even AMD/ATI is fabless after spinning off Global Foundries.

 

So many things wrong with this comment.

 

One of the reasons Apple have $100bn is because they are sensible.  Yes, if they wanted to get into manufacturing quickly, they could, but it would cost them massively.  They could buy the talent they need to have it happen, but every person they needed would over charge them relative to what everyone else pays, and paying over the odds isn't how Apple came to have so much cash.

 

UMC would need to do much more than just build a mega-fab (which is the $8bn figure you quote) to be able to run 20nm.  Sure, they could buy the latest ASML steppers, and the latest LAM etch chambers, but they still wouldn't have the process capability to make it all work.  That takes time to develop.

 

Your idea about Tower is even more ridiculous.  They specialize in MEMS, mixed signal and RF.  They know more about GaAs manufacturing than any other foundry companies, but Apple don't need that.  Like with UMC, you could buy Tower for $181m, drop $8bn on a mega-fab, but you still wouldn't know how to do 20nm processing.  On the plus side, your $181m would get you a CEO called Russell Ellwanger, who's name always amused me.  Aside from his comedy name, if you ever get chance to hear him speak, take it - he's really excellent.

post #36 of 100
Quote:
Originally Posted by Taniwha View Post

Yes, but that's why I think when the theatrics are over, business sense will prevail. 

 

I don't think Apple can survive long-term with ANY single-source supplier. Whether Samsung is or is not one of the multi-source suppliers is more of a risk-factor for Apple than for Samsung. We shouldn't forget that Samsung is the #1 Chip Fab worldwide and try as they might, the Taiwanese cannot compete.

 

As I suggested elsewhere, I think the Apple-Samsung scrap is actually a side-show. The REAL threat to Samsung but also to Apple are in fact the mainland chinese, not the Taiwanese.

 

I've no idea how mainland China is going to be a threat in the chipmaking space, at least in the medium term.  There is very little 300mm manufacturing there, let alone advanced geometries.

 

While China continues to have low-tech 200mm fabs, everyone else is about to start the arduous shift to 450mm.  Korea, Japan, Taiwan and the US are still miles ahead of China in chip manufacture.

post #37 of 100
Quote:
Originally Posted by Taniwha View Post

Yes, but that's why I think when the theatrics are over, business sense will prevail. 

 

I don't think Apple can survive long-term with ANY single-source supplier. Whether Samsung is or is not one of the multi-source suppliers is more of a risk-factor for Apple than for Samsung. We shouldn't forget that Samsung is the #1 Chip Fab worldwide and try as they might, the Taiwanese cannot compete.

 

As I suggested elsewhere, I think the Apple-Samsung scrap is actually a side-show. The REAL threat to Samsung but also to Apple are in fact the mainland chinese, not the Taiwanese.

ln my opinion, business sense is prevailing right now. I don't think this is theatrics. Samsung intends, if not to bury Apple, to bring Apple to its knees. For all of Apple's volume and for all of Apple's profit, I believe that Apple is in a very precarious position. Samsung, because of its diversification is much better positioned for life without Apple than Apple is for life without Samsung. That is why I think Apple has to boldly go where Apple has never gone before.

 

I take a look at Google. $12.5 billion seems like a waste of money to some but without that move, and especially had Apple been allowed to buy MotoMobile, I really think we'd be shoveling the dirt on Android  right now. As it is, those patents are helping to prop up Android quite well. (Why Google wants an OS is a mystery to me, being that, without Android today, Google would be doing better with Apple mobile alone (in the sense that they wouldn't have had to spend billions)... but maybe their reason is the same scenario that I'm talking about with Apple above... things change and Google might not be able to depend on Apple in the future).

 

As far as China... read PaulMJohnson above... but that too can change quickly. Regardless, Chinese manufacturing costs to get the same reliability rate are almost the same as anywhere else in the world... but China was there first.

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post #38 of 100
Quote:
Originally Posted by PaulMJohnson View Post

Quote:
Originally Posted by Taniwha View Post

Yes, but that's why I think when the theatrics are over, business sense will prevail. 

 

I don't think Apple can survive long-term with ANY single-source supplier. Whether Samsung is or is not one of the multi-source suppliers is more of a risk-factor for Apple than for Samsung. We shouldn't forget that Samsung is the #1 Chip Fab worldwide and try as they might, the Taiwanese cannot compete.

 

As I suggested elsewhere, I think the Apple-Samsung scrap is actually a side-show. The REAL threat to Samsung but also to Apple are in fact the mainland chinese, not the Taiwanese.

 

I've no idea how mainland China is going to be a threat in the chipmaking space, at least in the medium term.  There is very little 300mm manufacturing there, let alone advanced geometries.

 

While China continues to have low-tech 200mm fabs, everyone else is about to start the arduous shift to 450mm.  Korea, Japan, Taiwan and the US are still miles ahead of China in chip manufacture.

I will not dispute your comments relating to the state of Chipmaking in mainland China as of NOW. However I think that it would be a major mistake to underestimate what China can achieve if they decide a particular technology is a national priority. That is the advantage of the semi-capitalistic semi-state-controlled economy. As elsewhere in the world it is largely a matter of how much and by which channels the country is prepared to invest. The resources, including the human resources, are available. Buying the necessary skills or entering into certain kinds of bilateral agreements is an option for example, that may well allow them to jump generations in Chipmaking if they decide its a strategic issue. A few hundred billion dollars is pocket money to china. They may also come to some deals with France or Germany in chipmaking (in return, for example, for low-interest loans and support in the Euro-crisis ... and that's going to be on the European agenda for a generation or more into the future.

 

I really don't believe that China will let itself be held to ransom by foreign chipmakers for an indefinite period. That's really all I am saying. They do have some incredible advantages ... patriotism in the consumer market, an almost unlimited supply of top-rate academics and technology graduates ... and so on. For most of Asia (including Japan and South Korea) the countries close to China have a lot of reasons for wanting closer, better, friendlier ties with China, which is an increasingly formidable world economic force. They will eclipse the US in the next few years as the US economy continues to be hamstrung by failed economic policies, staggering debt (that has to be serviced) and internal dissent and unsustainable military expenditure.

 

Let's face it, if you're in the neighborhood of a tiger, you don't want him to be aggressive towards you, and all asian countries are sick and tired of US hegemony and their "**** the rest of the world" mentality. They don't "Like" the US. They "need" the us ... but only as long as it is a credible counterbalance to the chinese. If the balance continues to swing towards China and against the US, then the endgame is clear.

post #39 of 100
What about AMD?
post #40 of 100
Quote:
Originally Posted by PaulMJohnson View Post

 

So many things wrong with this comment.

 

One of the reasons Apple have $100bn is because they are sensible.  Yes, if they wanted to get into manufacturing quickly, they could, but it would cost them massively.  They could buy the talent they need to have it happen, but every person they needed would over charge them relative to what everyone else pays, and paying over the odds isn't how Apple came to have so much cash.

 

UMC would need to do much more than just build a mega-fab (which is the $8bn figure you quote) to be able to run 20nm.  Sure, they could buy the latest ASML steppers, and the latest LAM etch chambers, but they still wouldn't have the process capability to make it all work.  That takes time to develop.

 

Your idea about Tower is even more ridiculous.  They specialize in MEMS, mixed signal and RF.  They know more about GaAs manufacturing than any other foundry companies, but Apple don't need that.  Like with UMC, you could buy Tower for $181m, drop $8bn on a mega-fab, but you still wouldn't know how to do 20nm processing.  On the plus side, your $181m would get you a CEO called Russell Ellwanger, who's name always amused me.  Aside from his comedy name, if you ever get chance to hear him speak, take it - he's really excellent.

 

UMC is in the process of building out their sub 28nm capabilities so I have no clue what the hell you are smoking.  Are you stating that UMC is licensing IBM's 14nm and 20nm FinFET tech only to sit on it?  The reason they are offering 10% equity stakes is because the need the capital injection to build out their capacity...although I think they are claiming they are skipping 20nm planar to jump to 14nm FinFET.  Certainly Apple can use their 28nm planar capacity and UMC has stated it has developed 20nm planar capabilities but aren't going to offer them due to lack of interest.

 

The question is also whether Apple is also ready to go 3D with the A7 or if 20nm planar is a better fit for where they are at.  Because I guarandamntee you that if Apple went to UMC and asked for billions worth of 20nm planar capacity UMC and offered billions of aid to build the fabs that they would reconsider the direct jump to 14nm FinFET.

 

ASML also offered equity stake which Apple could also buy into (Intel bought 15% for $3B) earlier this year to get a starting push.

 

Yes, I know Tower does mostly CMOS and they specialize in SiGe not GaAs.  However they do have the operational knowledge of running fabs although how well that translates into the volume Apple needs is debatable.  Maybe it's not as good a fit as UMC but I think it's kinda like buying the very small PA Semi, not for the product they made at the time but because of other knowledge.  In this case operational rather than technical...although the RF CMOS expertise is likely useful the Apple as well.  That they have some SGOI experience helps too.

 

UMC is the better fit but as I said, Qualcomm is the most rumored partner for equity and a lock on UMC capacity.  Apple wont likely want to get into a bidding war with Qualcomm to buy UMC or even UMC capacity unless it has no choice in the matter.  Pursuing a smaller company and building out their own capabilities seem more in line with what they do.

 

Being an IDM is risky.  Being fabless is risky.  Between the two Apple has more supply constraint issues than worries about how to fill capacity.

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