WSJ: Apple finally signs deal with TSMC, decreases dependence on Samsung
A report from The Wall Street Journal on Friday claims Apple finally sealed a deal with Taiwan Semiconductor Manufacturing Co. earlier in June, with the first chips to start rolling off the production line in 2014.
The WSJ report cites a TSMC executive as saying Apple signed an agreement that will see the chipmaker build next-generation 20nm A-series SoCs that will power future iterations of the iPhone and iPad. Samsung will continue to be Apple's main supplier of A-series chips for 2013.
According to the source, the deal was years in the making, as TSMC was unable to manufacture silicon up to the speed and power standards required by Apple. With the technical difficulties solved, the Taiwanese firm will start chip production in 2014.
Discussions of a partnership date back to 2010, the Journal says, but in 2011 TSMC was unwilling to accept an offer from Apple to either invest heavily in the firm, or reach an agreement that would dedicate a certain amount of fab space specifically for the production A-series chips.
Friday's news appears to confirm part a rumor from earlier this week, which said companies had inked a deal. That report also claimed 20nm SoCs were on the way, but pegged mass production to start in September of 2013 ahead of the chips' inclusion in Apple's next-gen products in 2014.
Currently, Apple relies exclusively on Samsung's fabrication facilities for its A-series processors. The switch to TSMC is widely believed to be part of a move away from Samsung as Apple looks to decrease its reliance on the Korean company.
So far, Apple has succeeded in diversifying its supply chain to include Toshiba NAND flash memory modules and displays made by LG, Japan Display and Sharp. The Cupertino company still sources components from Samsung, but to a much lesser extent than it did just a few years ago.
The WSJ report cites a TSMC executive as saying Apple signed an agreement that will see the chipmaker build next-generation 20nm A-series SoCs that will power future iterations of the iPhone and iPad. Samsung will continue to be Apple's main supplier of A-series chips for 2013.
According to the source, the deal was years in the making, as TSMC was unable to manufacture silicon up to the speed and power standards required by Apple. With the technical difficulties solved, the Taiwanese firm will start chip production in 2014.
Discussions of a partnership date back to 2010, the Journal says, but in 2011 TSMC was unwilling to accept an offer from Apple to either invest heavily in the firm, or reach an agreement that would dedicate a certain amount of fab space specifically for the production A-series chips.
Friday's news appears to confirm part a rumor from earlier this week, which said companies had inked a deal. That report also claimed 20nm SoCs were on the way, but pegged mass production to start in September of 2013 ahead of the chips' inclusion in Apple's next-gen products in 2014.
Currently, Apple relies exclusively on Samsung's fabrication facilities for its A-series processors. The switch to TSMC is widely believed to be part of a move away from Samsung as Apple looks to decrease its reliance on the Korean company.
So far, Apple has succeeded in diversifying its supply chain to include Toshiba NAND flash memory modules and displays made by LG, Japan Display and Sharp. The Cupertino company still sources components from Samsung, but to a much lesser extent than it did just a few years ago.
Comments
Quote:
Originally Posted by Robin Huber
I know it's a stupid question, but why not Intel, AMD, or some other US company?
lol What does it matter (if it is US or not)? US hardware companies (besides apple) are responsible for what happened in the industry from 95 to 05. In fact, they suck so much that the asian equivalents from developing countries are just hammering it.
Obviously intel is great at what it does, but they would stab Apple at the first opportunity (ultrabook, wintel empire, etc).
Is there any value in AMD?
Well, once they can be given an assurance of quality, of course.
Ta-ra-ra Boom-de-ay
My heart is pumpted today
I bet Koh's butt is red
Kicked out of Apple's bed.
Best I can do- short notice and all.
This isn't a full stop but the message makes its point as Apple takes the fight to the beaches. At least this is another good piece of the plan now in place.
Apple needs to know that it must never rely upon one company so heavily, ever again, Robin. I wonder if diversity is not a reason Apple isn't looking to Intel, AMD at the moment. However, 'twould be great to see some work brought back to the Home Front.
Now to find a supplier of hq screens and drop them alltogether.
I don't think AMD has any fabricating plants, but in this article, the Intel CEO seems to hint that they might do something under the right circumstances.
Quote:
Originally Posted by Robin Huber
I know it's a stupid question, but why not Intel, AMD, or some other US company?
Not a stupid question at all. TSMC is a manufacturing beast and close to a pure foundry. That means they don't make their own chips (although they do do some design work for those that want it)- they just make whatever other people want them to make. You won't hear of a 'TSMC Pentium' chip or anything they actually make themselves. They just make a ton of stuff at low margins and can underbid most simply by economies of scale.
Intel likes to be a 'playa' They have their own products. They generally don't build 'low end' semiconductor devices making mostly high end processors. They like high margins.
Apple generally likes to enter business relationships where they are the dictator rather than a partner and TSMC is a better fit. That said, the only thing that worries me about TSMC is they struggled a little last year (production wise, not financially) and their two biggest customers went shopping because TSMC couldn't meet their demand. Adding a new 'biggest customer' when you're already struggling with your existing ones is questionable, and leaves Apple a little vulnerable if TSMC can't deliver. Hate Samsung all you want but they deliver. I think Apple found a pretty good balance- their knee jerk was probably to get rid of Samsung sooner, but if they get rid of Samsung at the expense of shooting off their own foot its not worth it.
Quote:
Originally Posted by Robin Huber
I know it's a stupid question, but why not Intel, AMD, or some other US company?
These are ARM chips, and Intel wants to focus on x86. AMD doesn't have enough capacity.
Quote:
Originally Posted by pedromartins
lol What does it matter (if it is US or not)? US hardware companies (besides apple) are responsible for what happened in the industry from 95 to 05. In fact, they suck so much that the asian equivalents from developing countries are just hammering it.
Obviously intel is great at what it does, but they would stab Apple at the first opportunity (ultrabook, wintel empire, etc).
Is there any value in AMD?
Texas Instruments is and has always been a great company... one I would love to see Apple buy.
However, I think Apple wanted to move to a foundry only company, where there wouldn't be a conflict of interest.
I don't think Apple does "knee jerk". While we like to think Apple is getting some sort of revenge on Samsung, I think this is just Apple diversifying its supply lines. Tim Cook seems to be very calculating, not one to be reactive. Everything he says and does is seems well thought out, never "off the cuff". Business is business.
Quote:
Originally Posted by Robin Huber
I know it's a stupid question, but why not Intel, AMD, or some other US company?
There are probably lots of reasons but I know one very good one.
Deals like this take years to set up and at the time they started talking to TSMC … intel was still playing the "iPhone isn't so great and Atom will whoop your ass," game.
Very recently, intel has been making noises like they would like to be Apple's sole supplier and also that they might move into mass production of ARM chips, but for the most part, and for most of recent history they have been hoping the mobile revolution will just go away and Windows will become dominant again.
Questions are really never stupid and this one is far from stupid. You have already gotten some good answers but I will add my perspective.
Why not Intel. Simple Intel is all about high margin devices. They do do foundry work for some really high end stuff but have not attempted to do low margins stuff like Apples processors. Frankly it would hurt Intels bottom line unless there is a more significant shrinkage in i86 demand. In a nut shell the costs of the chips would likely be high.
Why not AMD. That is even simpler, AMD has no production capacity. They spun off their manufacturing capacity into a firm called Global Foundries. Every AMD chip you buy these days is made either by Global Foundries or TSMC.
So you may ask why not Global Foundries. That is a more complex question to answer. First for a long time GF and or AMDs foundries stressed performance in their processes over low power. That is changing with the very heavy emphasis on low power these days. The other thing is that GF has been slow to spin up new processes. GF has been so slow that they had to go to TSMC to get chips built in the latest nodes. Things are changing at GF so maybe they might be a player in the future.
As for other US companies, not many offer foundry services. You also get into issues of packaging services and whom will be handling the stacked chip solutions. So even if a US based foundry could priduce the chips Apple wants there is nothing to say they have the technology to assemble the final product. By the way Samsungs factory use to be US owned from what I understand. In any event why the big concern? If you market a product world wide shouldn't you produce that product world wide? It isn't like you can go to Detroit or Chicago and set up a semiconductor plant and have a viable workforce to support it. You need a local with the right workforce and local support infrastructure.
Unlike many here I don't think this about what many think it is. That is this isn't revenge against Samsung. Rather it is most likely recognition that TMSC has made some significant gains with the new processes and actually appears to be the leader amongst foundries operating on sub 32nm nodes.
I see no justification for that. Apple has yet to stop using Samsung to manufacture flash drives for example. Over all Apples devices use a large number of semiconductor suppliers to say that Samsung is that much better than all of the rest is a bit of a stretch.