Rumor: TSMC to be exclusive manufacturer of both Apple's 'A10' & 'A11' chips

AppleInsider

Apple competitor Samsung could be on the outs for the next two generations of iPhone processors, according to a new rumor, which claims that rival Taiwan Semiconductor Manufacturing Company will be the sole provider of both the "A10" and "A11" CPUs.

The alleged win by TSMC was reported by China's Economic Daily News, as highlighted by DigiTimes. It claims that TMSC will use a 10-nanometer FinFET process for the "A11" processor in 2017, with production beginning as soon as the second quarter of next year.

Rumors date as far back as late 2015 suggesting TSMC could be the sole provider of "A10" chips. The company currently splits responsibility with Samsung for the A9 processor found in the iPhone 6s series, as well as the iPhone SE.

As for the "A11," earlier reports had suggested that TSMC would produce the lion's share of processors for the 2017 iPhone. But the latest rumor would suggest that TSMC has proven to Apple it can keep up with demand.

It should be noted that Apple's supply chain is complex and constantly shifting, with manufacturers sometimes failing to meet certain production or yield expectations. As a result, such reports from Economic Daily News should be taken with a grain of salt.

Still, a move to work solely with TSMC would not be unexpected from Apple. Until a few years ago Samsung was the exclusive producer of A-series processors at a factory in Austin, Tex.

Apple has gradually tried to reduce its dependence on Samsung -- which sells competing phones, tablets, and computers. The results have been varied, given that the company is one of the few manufacturers that can keep up with demand for products like iPhones.

brakken

Good. Go suck it, ss.
Congratulations, TSMC!

hentaiboy

brakken said:

Good. Go suck it, ss.
Congratulations, TSMC!

Just don't whine when there's supply chain delays...

stantheman

Samsung will be producing 10 nm processors for its own devices and for those of customers, but without Apple orders Samsung's unit cost may be considerably higher than before. It makes a big difference whether startup and overhead costs are divided among only 300 million units annually, let's say, versus 500 million. If Samsung raises processor prices to cover the difference, then some smartphone companies will turn to other suppliers -- which would only make the situation worse for Samsung (i.e., reduced volume, higher unit fixed costs). But if Samsung doesn't increase prices, its profits will suffer.

Applemos

brakken said:

Good. Go suck it, ss.
Congratulations, TSMC!

Seriously?! You're THAT invested in the component-makers of the iPhone?

blastdoor

stantheman said:

Samsung will be producing 10 nm processors for its own devices and for those of customers, but without Apple orders Samsung's unit cost may be considerably higher than before. It makes a big difference whether startup and overhead costs are divided among only 300 million units annually, let's say, versus 500 million. If Samsung raises processor prices to cover the difference, then some smartphone companies will turn to other suppliers -- which would only make the situation worse for Samsung (i.e., reduced volume, higher unit fixed costs). But if Samsung doesn't increase prices, its profits will suffer.

I agree this is a positive for TSMC and negative for Samsung, but it's easy to exaggerate the magnitude. Apple's business at TSMC is displacing some of TSMC's old customers, who are moving over to Samsung. So I doubt Samsung's fabs will be sitting idle. 

Longer term, though, Apple's business is positive because Apple is willing to lay out the $$ necessary to push forward much more aggressively with new fab processes than most other foundry customers. This means that TSMC could eventually start to pull ahead a bit of Samsung in the Moore's Guesstimate race.  But that won't happen over night. 

lkrupp

Samsung can “copy” Apple whether or not they manufacture parts for the iPhone. The idea that Samsung has some unfair advantage over Apple by being one of Apple’s suppliers doesn’t hold water. It doesn’t make any difference. If Samsung can supply the parts in the quantity, quality, and price Apple demands then so be it. Now if Samsung were to intentionally limit production, intentionally lower quality in an attempt to damage Apple that would be a different matter. Having multiple suppliers for parts would seem to me to be a good idea. My youngest son is a manufacturing engineer who has to figure out how to make the parts the customer wants, in the quantity and quality the customer wants, on time, and still make a profit for his boss, the owner of the company. I hear stories about how this all works all the time.

cnocbui

stantheman said:

Samsung will be producing 10 nm processors for its own devices and for those of customers, but without Apple orders Samsung's unit cost may be considerably higher than before. It makes a big difference whether startup and overhead costs are divided among only 300 million units annually, let's say, versus 500 million. If Samsung raises processor prices to cover the difference, then some smartphone companies will turn to other suppliers -- which would only make the situation worse for Samsung (i.e., reduced volume, higher unit fixed costs). But if Samsung doesn't increase prices, its profits will suffer.

Samsung have several large scale customers, I suspect it unlikely they are going to have any problem with operating at full capacity and optimum economies of scale.  While they may have lost orders from Apple for processors, they have reportedly gained a huge order from Apple for OLED panels.  The display is usually the most expensive component in high-end phones.

By the way, AI always states "Apple has gradually tried to reduce its dependence on Samsung".  Has anyone at Apple actually announced that to be the case officially, or is it just someone's wishful thinking being passed off as fact?

redgeminipa

Given the reported differences between the Samsung and TSMC chips found in the iPhone 6s, I say good riddance Samsung!

ericthehalfbee

I don't really care who supplies Apple with processors, Samsung or TSMC.

That said, if Samsung loses out permanently to TSMC then you gotta wonder if the people in charge of their semiconductor division aren't a little pissed at the mobile division for "rocking the boat", so to speak. While I doubt Apple would leave Samsung just to spite them over all this copying business, you have to think that WHEN Apple was presented with a viable alternative (TSMC) that it's like frosting on the cake for them.

jamesthelesser

AppleInsider said:

The alleged win by TSMC was reported by China's Economic Daily News, as highlighted by DigiTimes. It claims that TMSC will use a 10-nanometer FinFET process for the "A11" processor in 2017, with production beginning as soon as the second quarter of next year.

Just as an aside....at 10-nanometers, we're pretty close to the limits of physics on die shrinks for processors, arn't we? I'm definitely not an expert, but I keep hearing 7-nanometers is about as small as we can reliably go. They'll probably reach that next year or the year after.

What's next on the horizon?

srice

jamesthelesser said:

Just as an aside....at 10-nanometers, we're pretty close to the limits of physics on die shrinks for processors, arn't we? I'm definitely not an expert, but I keep hearing 7-nanometers is about as small as we can reliably go. They'll probably reach that next year or the year after.

What's next on the horizon?

Additional procs.  So eventually we should see a A12 quad-proc or something like that. About the time Android phones start seeing 32 proc in an attempt to keep up. :-D

leavingthebigg

blastdoor said:

stantheman said:

Samsung will be producing 10 nm processors for its own devices and for those of customers, but without Apple orders Samsung's unit cost may be considerably higher than before. It makes a big difference whether startup and overhead costs are divided among only 300 million units annually, let's say, versus 500 million. If Samsung raises processor prices to cover the difference, then some smartphone companies will turn to other suppliers -- which would only make the situation worse for Samsung (i.e., reduced volume, higher unit fixed costs). But if Samsung doesn't increase prices, its profits will suffer.

I agree this is a positive for TSMC and negative for Samsung, but it's easy to exaggerate the magnitude. Apple's business at TSMC is displacing some of TSMC's old customers, who are moving over to Samsung. So I doubt Samsung's fabs will be sitting idle. 

Longer term, though, Apple's business is positive because Apple is willing to lay out the $$ necessary to push forward much more aggressively with new fab processes than most other foundry customers. This means that TSMC could eventually start to pull ahead a bit of Samsung in the Moore's Guesstimate race.  But that won't happen over night. 

The magnitude is bragging rights. Samsung and a lot of analysts like to promote how much Apple relies on Samsung components even though Apple pays for those components, which in turn helps Samsung's profits. 

Moving solely to TSMC removes that promotion, but opens the door for analysts to sharpen their antagonistic rhetoric towards Apple and TSMC for having the audacity to move forward without Samsung.

Seeing the TSMC 2017 win rumor was a major surprise. Upon reading the rumor, I wondered what technologies were built into the processor Apple did not want Samsung having firsthand knowledge about. 

Good luck TSMC!

Rayz2016

cnocbui said:

stantheman said:

Samsung will be producing 10 nm processors for its own devices and for those of customers, but without Apple orders Samsung's unit cost may be considerably higher than before. It makes a big difference whether startup and overhead costs are divided among only 300 million units annually, let's say, versus 500 million. If Samsung raises processor prices to cover the difference, then some smartphone companies will turn to other suppliers -- which would only make the situation worse for Samsung (i.e., reduced volume, higher unit fixed costs). But if Samsung doesn't increase prices, its profits will suffer.

Samsung have several large scale customers, I suspect it unlikely they are going to have any problem with operating at full capacity and optimum economies of scale.  While they may have lost orders from Apple for processors, they have reportedly gained a huge order from Apple for OLED panels.  The display is usually the most expensive component in high-end phones.

By the way, AI always states "Apple has gradually tried to reduce its dependence on Samsung".  Has anyone at Apple actually announced that to be the case officially, or is it just someone's wishful thinking being passed off as fact?

No one at Apple has ever said this as far as I remember. Fortunately, Cook is the sort of bloke who can separate Samsung-the-chip-supplier from Samsung-the-thieving-mofos-mobile-division. This rumour comes around every year, just before an iPhone release. If it ever comes to pass it will be because TMSC can make better chips (They've already shown they can make them more power efficient than Samsung) and not because Steve would have done it. 

ericthehalfbee

cnocbui said:

stantheman said:

Samsung will be producing 10 nm processors for its own devices and for those of customers, but without Apple orders Samsung's unit cost may be considerably higher than before. It makes a big difference whether startup and overhead costs are divided among only 300 million units annually, let's say, versus 500 million. If Samsung raises processor prices to cover the difference, then some smartphone companies will turn to other suppliers -- which would only make the situation worse for Samsung (i.e., reduced volume, higher unit fixed costs). But if Samsung doesn't increase prices, its profits will suffer.

Samsung have several large scale customers, I suspect it unlikely they are going to have any problem with operating at full capacity and optimum economies of scale.  While they may have lost orders from Apple for processors, they have reportedly gained a huge order from Apple for OLED panels.  The display is usually the most expensive component in high-end phones.

Way to miss the point.

First, Apple is transferring billions of dollars in revenue from Samsung to a rival, TSMC. Money that TSMC can in turn put back into R&D in getting their new fabs online and to get new process technologies up and running sooner. Production capacity has nothing to do with it.

Second, while Samsung has lots of customers, which of those customers are ordering hundreds of millions of state-of-the-art processors on their latest process technology? Or are you assuming (incorrectly) that every chip Samsung makes is on the latest process technology (or that they are even using the SAME process - for example, processors vs NAND flash).

You can bet this is a significant blow to Samsung, if true.

indyfx

jamesthelesser said:

AppleInsider said:

The alleged win by TSMC was reported by China's Economic Daily News, as highlighted by DigiTimes. It claims that TMSC will use a 10-nanometer FinFET process for the "A11" processor in 2017, with production beginning as soon as the second quarter of next year.

Just as an aside....at 10-nanometers, we're pretty close to the limits of physics on die shrinks for processors, arn't we? I'm definitely not an expert, but I keep hearing 7-nanometers is about as small as we can reliably go. They'll probably reach that next year or the year after.

What's next on the horizon?

Vertical stacking of transistors

jurassic

hentaiboy said:

brakken said:

Good. Go suck it, ss.
Congratulations, TSMC!

Just don't whine when there's supply chain delays...

TSMC is the larger IC fabricator. Not only is it a larger company than Samsung in that area, but it also produces faster, more efficient processors. The A9 form both TSMC and Samsung were tested shortly after the iPhone 6S was introduced. The TSMC produced A9 was slightly faster, and also was more power efficient than Samsung's. TSMC has been rapidly building up its production facilities over the past few years. If they produce better A10 and A11 processors than Samsung, and more reliably, then Apple is wise to give the entire contract to TSMC.

waltg

Sole supplier vs multiple supplier is as always a double edged sword, although if apple is going single source I'm sure that supplier has passed all the trials and tests to get there... But,, it still is prudent business to have another lined up,, just in case of something uncontrollable going stinko,,, earthquake, fire, inhouse family feud,, one can never tell.. Samsung's chip business is a total separate entity from their cell business and will continue to operate like that, that is what makes them one of the giants in the industry.. And just to prick a few hairs out there,,, personally I'm glad Samsung's cell devision works so hard at producing a top quality piece of equipment,, great competition keeps Apple and all the others on their toes with more great innovations that WE enjoy! W.

tmay

ericthehalfbee said:

cnocbui said:

Samsung have several large scale customers, I suspect it unlikely they are going to have any problem with operating at full capacity and optimum economies of scale.  While they may have lost orders from Apple for processors, they have reportedly gained a huge order from Apple for OLED panels.  The display is usually the most expensive component in high-end phones.

Way to miss the point.

First, Apple is transferring billions of dollars in revenue from Samsung to a rival, TSMC. Money that TSMC can in turn put back into R&D in getting their new fabs online and to get new process technologies up and running sooner. Production capacity has nothing to do with it.

Second, while Samsung has lots of customers, which of those customers are ordering hundreds of millions of state-of-the-art processors on their latest process technology? Or are you assuming (incorrectly) that every chip Samsung makes is on the latest process technology (or that they are even using the SAME process - for example, processors vs NAND flash).

You can bet this is a significant blow to Samsung, if true.

Then, there's this...

http://www.extremetech.com/extreme/198925-did-chip-espionage-ip-theft-give-samsung-its-14nm-manufacturing-lead

I'm thinking that Apple probably dinged Samsung for that.

TurboPGT

I can't begin to count the number of articles over many years now, that start with TSMC to be exclusive manufacturer of...

cnocbui

ericthehalfbee said:

cnocbui said:

Samsung have several large scale customers, I suspect it unlikely they are going to have any problem with operating at full capacity and optimum economies of scale.  While they may have lost orders from Apple for processors, they have reportedly gained a huge order from Apple for OLED panels.  The display is usually the most expensive component in high-end phones.

Way to miss the point.

First, Apple is transferring billions of dollars in revenue from Samsung to a rival, TSMC. Money that TSMC can in turn put back into R&D in getting their new fabs online and to get new process technologies up and running sooner. Production capacity has nothing to do with it.

Second, while Samsung has lots of customers, which of those customers are ordering hundreds of millions of state-of-the-art processors on their latest process technology? Or are you assuming (incorrectly) that every chip Samsung makes is on the latest process technology (or that they are even using the SAME process - for example, processors vs NAND flash).

You can bet this is a significant blow to Samsung, if true.

Not missing the point at all.  Samsung's 14nm manufacturing capability is finite.  If production for Apple utilised 50% of that capacity and Apple then went to TSMC and Samsung then found customers whose orders required all of that 50% of capacity vacated by Apple, then Samsung would have lost nothing.

Samsung produce SOTA processors for their own needs - their Exynos line built on 14nm are not just used in the S7 models but also in several others like the J7, A10, A5, A7.  They also sell their 14nm built Exynos processors to a couple of Chinese manufacturers like Meizu and Lenovo.

Then there's Qualcom and their 820,  AMD and their ZEN processors, as well as their GPUs.  Then you can add Nvidia to that list of customers on 14nm also.  It would seem the list of high profile customers Samsung isn't manufacturing stuff for on their 14nm process is shorter than the list of those for whom they are.