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

Posted:
in Future Apple Hardware edited January 2014
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.
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Comments

  • Reply 1 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?
  • Reply 2 of 76
    cnocbuicnocbui Posts: 3,613member
    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...
  • Reply 3 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?
  • Reply 4 of 76
    saareksaarek Posts: 1,540member


    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?

  • Reply 5 of 76
    If this report is true then should Apple be burning the Samsung bridge?
  • Reply 6 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))
  • Reply 7 of 76


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

  • Reply 8 of 76


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

  • Reply 9 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. 

  • Reply 10 of 76
    blastdoorblastdoor Posts: 3,367member

    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. 

  • Reply 11 of 76
    malaxmalax Posts: 1,598member

    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.

  • Reply 12 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.

  • Reply 13 of 76
    MacProMacPro Posts: 19,776member
    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.
  • Reply 14 of 76
    hill60hill60 Posts: 6,992member

    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.

  • Reply 15 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/
  • Reply 16 of 76
    gazoobeegazoobee Posts: 3,754member

    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.  

  • Reply 17 of 76
    gazoobeegazoobee Posts: 3,754member


    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). 

  • Reply 18 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.
  • Reply 19 of 76
    gazoobee wrote: »
    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
  • Reply 20 of 76
    saarek wrote: »
    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.
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