TSMC initiates trial manufacturing of Apple's next-gen A6 chips - report

Posted:
in General Discussion edited January 2014
According to a new report, Taiwan Semiconductor Manufacturing Company has begun trial production of Apple's next-generation A6 processors, lending credence to rumors that the iPhone maker is moving orders away from supplier and rival Samsung.



A source familiar with the matter told Reuters on Friday that test manufacturing of the next generation of chips, which are expected to make their way into devices in 2012, has begun.



"TSMC has got all the authorisation and details ready. Whether Apple puts in a formal order will depend on the yield rate," the source said. The report corroborates recent rumors suggesting the Cupertino, Calif., would tap TSMC for semiconductor orders as its relationship with Samsung has grown tense.



In June, numerous sources in the semiconductor industry claimed Apple would switch to TSMC for the A6 chip next year, with one report characterizing chatter about the deal as "deafening."



Early this year, it was said that TSMC could partner with Apple to produce the A5 chip for the iPad 2, but x-rays of the A5 revealed that Samsung has continued to manufacturer the custom processors.



The partial loss of Apple's business could come as a heavy blow to Samsung, which has warned of weakened demand for chips in the second half of 2011. The Korean electronics giant recently combined its component manufacturing businesses in hopes of buoying its display operations with the more profitable semiconductor side of the business.



While Apple is expected to be Samsung's largest customer this year with a estimated $7.8 billion in component purchases, the two companies are also fierce rivals and now legal opponents. Apple's top brass said in April that Samsung remains a "valuable partner," but tensions arising from the legal dispute between the rivals has worsened in recent months.



?It has become very public and very ugly, very quickly,? Gleacher & Co. analyst Brian Marshall said earlier this month after Apple filed a complaint with the International Trade Commission.

Comments

  • Reply 1 of 14
    Lots of people were saying samsung was so large and their divisions so separate that the lawsuit wouldnt have an effect on what Apple purchases from them. I have been inclined to agree but it appears this may not be the case. I guess when you look at the bottom line (8 or so billion in sales) those far flung divisions may find that they should have a more unified gameplan.
  • Reply 2 of 14
    replicantreplicant Posts: 121member
    What good is it to ship the manufacturing to TSMC only to have them as competitors in a few years?



    The semiconductor manufacturing process sounds highly automated...perhaps it's something that can be done in North America with low operating costs? Intel has manufacturing plants here and they are not doing so bad after all.



    Can it be that the cost of product leaks and IP theft (millions in lawyer fees alone) might be higher than the savings gained in lower manufacturing costs?
  • Reply 3 of 14
    ivabignivabign Posts: 61member
    Quote:
    Originally Posted by replicant View Post


    What good is it to ship the manufacturing to TSMC only to have them as competitors in a few years?



    The semiconductor manufacturing process sounds highly automated...perhaps it's something that can be done in North America with low operating costs? Intel has manufacturing plants here and they are not doing so bad after all.



    Can it be that the cost of product leaks and IP theft (millions in lawyer fees alone) might be higher than the savings gained in lower manufacturing costs?



    I disagree, with that logic, Intel should be making entire computers... Since that is not the case this makes perfect sense.... Partner with a company that is not going to compete with you.
  • Reply 4 of 14
    replicantreplicant Posts: 121member
    Quote:
    Originally Posted by Ivabign View Post


    I disagree, with that logic, Intel should be making entire computers... Since that is not the case this makes perfect sense.... Partner with a company that is not going to compete with you.



    What I am saying is that it's maybe just a matter of time before a supplier becomes a competitor.

    And with my logic, Intel manufactures its own chips in the States and still makes a nice profit so why can't Apple do the same?
  • Reply 5 of 14
    tetonteton Posts: 1member
    Quote:
    Originally Posted by replicant View Post


    What I am saying is that it's maybe just a matter of time before a supplier becomes a competitor.

    And with my logic, Intel manufactures its own chips in the States and still makes a nice profit so why can't Apple do the same?



    Intel doesn't do most of its manufacturing in the US for either fabs or assembly test sites. Most of that happens in the Philippines (automotive chips) or Asia (non-automotive chips). Intel's US production is tiny in comparison.



    Yes chip fab and assembly test sites are highly automated. The number of workers per production site has dramatically dropped over the last 20 years. The cost of the sites is huge. Multiple tens of billions of $US to build. A lower price for site construction could be a big draw along with less expenses for shipping raw materials.



    TSMC, if I remember correctly, is what is called a headless fab. Many companies hire them to do chip production of already designed chips. Headless fabs don't do chip design. If they started using designs from one company for their own chip production all of their customers would drop them very quickly.



    It could also be hard, but not impossible, for them to go to in-house design of consumer electronics since the engineers they employ are are production engineers not electronics engineers.



    Over all they would be much less of a threat than Samsung or any of the other suppliers that already produce consumer electronics.
  • Reply 6 of 14
    Quote:
    Originally Posted by teton View Post


    Intel doesn't do most of its manufacturing in the US for either fabs or assembly test sites. Most of that happens in the Philippines (automotive chips) or Asia (non-automotive chips). Intel's US production is tiny in comparison....



    Yes...



    Over all they would be much less of a threat than Samsung or any of the other suppliers that already produce consumer electronics.



    Welome. I do support your argument but let be known Philippine IS located in Asia. The exact location for your computer (non-automatic) chips production there is in Malaysia. They also have facilities elsewhere, the place shall not be named.



    The debate whether Apple should transfer production/manufacturing in the US is a done deal long time ago. Take heed, at least for the considerable time in the future. The news regarding TSMC however is a good one. One should not put all of their eggs in one basket lest something bad happen, it sours. If quality can be maintained, the benefits of using multiple manufacturing partners are pretty much endless.
  • Reply 7 of 14
    _hawkeye__hawkeye_ Posts: 139member
    Quote:
    Originally Posted by AppleInsider View Post


    Apple's top brass said in April that Samsung remains a "valuable partner?"



    ??until such time as we can find replacements for those SOBs?



    Maybe they didn't say it out loud, but anybody how knows anything about Steve Jobs knows it to be true.
  • Reply 8 of 14
    umairumair Posts: 16member
    Me want iphone 5 with A6 DO IT APPLE
  • Reply 9 of 14
    Quote:
    Originally Posted by replicant View Post


    What good is it to ship the manufacturing to TSMC only to have them as competitors in a few years?



    The semiconductor manufacturing process sounds highly automated...perhaps it's something that can be done in North America with low operating costs? Intel has manufacturing plants here and they are not doing so bad after all.



    Can it be that the cost of product leaks and IP theft (millions in lawyer fees alone) might be higher than the savings gained in lower manufacturing costs?



    TSMC has, historically, never got into end-user products. It was never part of another computer or electronics company. That is why it is manufacturing chips for Intel, AMD, and nVidia. In fact, many of the iPhone/iPad already contains TSMC manufactured chips.
  • Reply 10 of 14
    uguysrnutsuguysrnuts Posts: 459member
    Quote:
    Originally Posted by UMAIR View Post


    Me want iphone 5 with A6 DO IT APPLE



    Don't we all.
  • Reply 11 of 14
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by replicant View Post


    What I am saying is that it's maybe just a matter of time before a supplier becomes a competitor.

    And with my logic, Intel manufactures its own chips in the States and still makes a nice profit so why can't Apple do the same?



    Some suppliers are entirely dedicated to being suppliers, Foxconn is one, TSMC is another. Neither is likely to ever compete with clients for consumers because the business they would lose is so much greater than the business they would gain.



    Foundry work is relatively low margin (compared to Apple's business), so it would make more sense for Apple to focus on making more high end consumer goods, than to spend the next 10 years trying to become absolute 100% vertically integrated.



    Apple has no experience manufacturing semiconductors, in order to get it, it would pretty much have to buy a semiconductor firm. Say it bought Intel. Now it's doing exactly what you said was bad, it's supplying its competitors, so those competitors are going to go elsewhere as much as they can.



    It's a bad idea, Apple knows it's a bad idea, and that's why they're not doing it.
  • Reply 12 of 14
    mjtomlinmjtomlin Posts: 2,673member
    Quote:
    Originally Posted by replicant View Post


    The semiconductor manufacturing process sounds highly automated...perhaps it's something that can be done in North America with low operating costs? Intel has manufacturing plants here and they are not doing so bad after all.



    it's easier and cheaper to keep everything regional... Most of the parts and components, as well as assembly all happen in the Asain Pacific region. Only the final product gets shipped overseas.



    If Apple were to hit a silgnificant production volume, then it may become an option to start making the CPUs themselves here in the US.
  • Reply 13 of 14
    wizard69wizard69 Posts: 13,377member
    Quote:
    Originally Posted by replicant View Post


    What good is it to ship the manufacturing to TSMC only to have them as competitors in a few years?



    TSMC isn't in that business now. You don't deal with something that might happen in the future today. Two very important points in business.

    Quote:

    The semiconductor manufacturing process sounds highly automated...perhaps it's something that can be done in North America with low operating costs? Intel has manufacturing plants here and they are not doing so bad after all.



    Samsung has plants right here in the USA, the one in Texas has been on a hiring bing for awhile.



    The problem isn't wage costs for Apple it is the reality that bleeding edge plants don't last long and are extremely expensive. For TSMC this works out OK because they can continue to use those plants for a very long time. For Apple it is an entirely different story. If Apple built a 32nm plant today what would they do with it in two years time? The reality is Apple doesn't yet have the internal demand to justify buying a new semiconductor plant every two years. Especially considering that such a plant costs two or three billion dollars to build.



    In any event semi conductor manufacturing is a world wide reality. AMD, well Global Foundries has a plant coming on line here in NY. All this whine about moving production to the US is basically BS. Apple can only buy from those suppliers that meet Apples needs.

    Quote:



    Can it be that the cost of product leaks and IP theft (millions in lawyer fees alone) might be higher than the savings gained in lower manufacturing costs?



    Your assumption that it is all about manufacturing costs is bogus. For example Apple might be going to TSMC because they have a specific capacity Apple wants. One thing that is never factored into the equations here is that A5 runs on the same process geometry as the A4. It never made it to Samsungs 32nm process. One could see that as a failure right there. So did Sammy screw up by copying Apple or by failing with the G5. And yes the fact that G5 is not on a 32nm process right now can be seen as a failure.
  • Reply 14 of 14
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by wizard69 View Post


    For example Apple might be going to TSMC because they have a specific capacity Apple wants. One thing that is never factored into the equations here is that A5 runs on the same process geometry as the A4. It never made it to Samsungs 32nm process. One could see that as a failure right there. So did Sammy screw up by copying Apple or by failing with the G5. And yes the fact that G5 is not on a 32nm process right now can be seen as a failure.



    Right, in fact there's vague indications that TSMC are further along than Samsung with 28nm, plus they may well just have more capacity given they are the biggest of the contract Foundries. Lord knows Apple is going to need a lot of A6s.
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