Samsung to invest $4 billion in Texas iPhone, iPad chip plant

2

Comments

  • Reply 21 of 48
    misamisa Posts: 827member
    blastdoor wrote: »
    Problem with that theory is that most of the products into which Samsung chips are inserted are assembled in China or elsewhere in Asia. So putting a fab in TX means shipping the chips to China, putting them in a product, and then shipping the product back to the US. It would be likely easier to just build the chips in Korea. 

    It seems to me that the main advantage of being in Austin is that's where Apple's CPU people are. I guess a secondary advantage might be the Austin labor market. But I bet that Samsung made these plans to build in Austin because of Apple, before relations got so frosty. I bet if they had it to do over again, they would have made this investment in Korea. 

    Not quite. Shipping is still shipping. If you notice, South Korea is isolated from the mainland, just like Japan and Taiwan are. So anything produced or assembled in Japan, Taiwan or South Korea has to be shipped by sea. In the Asia area, this is something of a 8hour to 3 day type of trip. But To ship from Asia to the US and back to Asia, is a 16 week round trip. That is if they're shipped by sea.

    Now if they're shipped by air, then all bets are off. I'm sure one plane load of chips every week is more cost effective than waiting 8 weeks for them to arrive with the possibility of the ship losing the freight due to weather. But when you start shipping things, this is where your part leaks come from, as they're examined by customs/shipping people. So if you want to retain a highly secret production process, you have to make absolutely everything in the same building. That doesn't really work with complex devices, even automobiles are not all assembled in the same building.

    Apple has enough money that they could produce everything in the US if they wanted to, but they'd have to do it with robots, not people.
  • Reply 22 of 48
    drblankdrblank Posts: 3,383member

    Quote:

    Originally Posted by digitalclips View Post



    I hope much of that will be sourced else where by Apple sooner than later. That or Sammy really changes its ways and becomes a friend of Apple's again.


    Personally, I think it is Samsung's mobile division that's the problem.  But if the component division gives their Mobile division info about an upcoming iPhone model, that's not good business practices.  The other problem is Samsung NEEDS to retain as much business as they can with Apple, and until Apple can divert component sourcing elsewhere, they rely on Samsung just as much.  The potential problems is can or will Samsung keep up with Apple's demand and there is a risk associated with relying on Samsung to deliver quality components in a timely manner if the company can't be trusted.


     


    If Apple were to own and operate their own foundry to produce certain components, then they would probably cut costs and rely on themselves for delivery.  It's a tough situation for most computer mfg.  IBM, for instance, has their own chip mfg plants for much of their own costly chips.    A long time ago IBM made most of their own chips that ended up in their mainframes, they were actually the largest chip maker for a while, but nowadays, they only make certain chips, like processors and other chips designs, but still has to rely on outside vendors.


     


    Apple may need to change from outsourcing to doing it themselves, but since the mfg constantly changes it is difficult to always have the latest and greatest plants to keep up.  Which is a large reason why the smaller chip designers have to use the outsourcing model.  It isn't so much the labor costs as it is the equipment costs and constantly upgrading plants to the latest mfg equipment. Most chip mfg plants are automated to the point where there are only a small number of people operating the equipment.

  • Reply 23 of 48
    mausz wrote: »
    All stories which make the headlines about TSMC are always associated with delays...
    Perhaps one reason is because on time deliveries are not headline material - in many cases in the news, usually the events that are reported are only when things go bad.
  • Reply 24 of 48

    Quote:

    Originally Posted by digitalclips View Post



    I hope much of that will be sourced else where by Apple sooner than later. That or Sammy really changes its ways and becomes a friend of Apple's again.


     


    It should go to GlobalFoundries Malta plant which is fully certified for ARM chips and they are jointly working with TSMC to get down to 20nm chipsizes with FinFET that scales down to 10nm in present implementation.


     


    http://hexus.net/tech/items/cpu/43661-arm-globalfoundries-collaborate-enable-next-generation-devices-20nm-finfet-process-technologies/


     


    Lots of solid info on how the ARM spacing manufacturing is moving forward:


     


    http://www.investorvillage.com/smbd.asp?mb=476&mn=244814&pt=msg&mid=12025351

  • Reply 25 of 48
    jragostajragosta Posts: 10,473member
    emacs72 wrote: »

    was this average of "40% gross margin" ever published and verified someplace?

    I'm being conservative. Intel's gross margin is over 60%. AMD has typically averaged 40-50%. Others in the semiconductor industry are over 90%.
    http://www.fnno.com/story/331-ceva-has-highest-gross-margin-semiconductors-industry-ceva-rmbs-ezch-auto-generated

    The average gross margin for the industry is over 60%:
    http://beta.fool.com/saintgermain/2012/08/20/semiconductor-industry-cycle-about-turn/10109/

    Gross margin in semiconductor products is quite high - so my 40% estimate is almost certainly too low.
    emacs72 wrote: »
    incidentally: in 2011, Samsung Electronics (not Samsung Group) revenue was 165 trillion KWR (or $143.7 billion Canadian in revenue and $14.2 billion in operating profit).

    http://www.samsung.com/us/aboutsamsung/ir/financialinformation/annualreport/downloads/2011/SECAR2011_Eng_Final.pdf

    as such, the Apple deal accounts for about six (6) percent of Samsung Electronics revenue or less than four (4) percent revenue for Samsung Group.

    Apple is projected to buy $11 B in components from Samsung this year:
    http://www.mobot.net/apple-buy-11bn-worth-components-sworn-enemy-samsung-2012-39197

    I don't have Samsung's sales projections for 2012, but since they weren't growing all that fast, Apple's $11 B is still a big percentage. And if you use the industry average of 65% gross margins, losing Apple would cost them $7 B in profits.

    NO ONE walks away from $7 B in profits lightly. Considering it to be insignificant is just plain foolish.
  • Reply 26 of 48
    mauszmausz Posts: 243member

    Quote:

    Originally Posted by diplication View Post





    Perhaps one reason is because on time deliveries are not headline material - in many cases in the news, usually the events that are reported are only when things go bad.


     


    Quite right, but I have not heard of any apple products being delayed because of manufacturing problems with Samsung, the A4/A5/A5X are all deliverd in great numbers and meeting the quality demands Apple has. The new old ipad 2 is also getting the smaller lithography A5 SoC produced by Samsung without big problems. I have heard of numerous NVidia cards which were delayed because of TSMC problems. Also have heard of quality issues with LG/Sharp regarding iPad retina displays etc.

  • Reply 27 of 48
    ksecksec Posts: 1,568member

    Quote:

    Originally Posted by mausz View Post


     


    All stories which make the headlines about TSMC are always associated with delays (NVidia has had a lot of trouble because of TSMC). I highly doubt it they will have their production fixed in 2014+ as these delays have been haunting them for years. It would not be wise for Apple to move to any other supplier. Only Samsung can deliver the quality and numbers to them right now. For SoC's as well as memory and for that matter iPad Retina screens. Apple could simply not have had the business its having now without Samsung. There is not other supplier able to take their place, not previously and not in the near future.



     


    TSMC actually have great Tech, the problem is they are always being too STUPIDLY conservative. They fired half of their work force during Lehman Brothers crisis and only to rehire them back after two months or so. They are slow to upgrade and built new Fabs, and happen to mispredict demand by HUGE margin. 28nm for example, even those who read the tech news would have some idea how hot these things will be. And yet TSMC are so unprepared and slow to react. 


     


    However when serious shxt happens, like Qualcomm decide to sign a deal with GF and Samsung, Nvidia threatens to move to GF etc, they reacted and prove they are more then capable in moving quickly, the latest news is their 28nm are up to 80% yield rate. That is a huge achievement in such a short time.


     


    So basically TSMC got great potential however their management lack visions. 


     


    And Oh, may be someday Intel will finally decide to Fab Apple's SoC...

  • Reply 28 of 48


    Samsung and Apple both have strong interests in continued collaboration on chips and to the success of Apple products. Samsung is the only firm capable of meeting Apple's increasing chip needs, and it makes a profit on every device Apple sells. But within Samsung's conglomerate style organization, the handset division is too powerful, and contributes too much to the bottom line, to be reigned in. It needs to make $, and the only way to do that right now is to follow Apple's design lead.


     


    Accordingly, Samsung has told Apple that if Apple head-smacks the handset division in court, that's fine (some Samsung "told you so's" might actually be pleased), but whatever happens in consumer products litigation, its not going to effect their lasting collaboration in chips.   

  • Reply 29 of 48
    emacs72emacs72 Posts: 356member

    Quote:

    Originally Posted by jragosta View Post





    I don't have Samsung's sales projections for 2012, but since they weren't growing all that fast, Apple's $11 B is still a big percentage. And if you use the industry average of 65% gross margins, losing Apple would cost them $7 B in profits.  NO ONE walks away from $7 B in profits lightly. Considering it to be insignificant is just plain foolish.


     


    Samsung Electronics' gross margins are less than 35% according to http://markets.ft.com/Research/Markets/Tearsheets/Financials?s=A005930:KSC

  • Reply 30 of 48
    al_bundyal_bundy Posts: 1,525member

    Quote:

    Originally Posted by ksec View Post


     


    TSMC actually have great Tech, the problem is they are always being too STUPIDLY conservative. They fired half of their work force during Lehman Brothers crisis and only to rehire them back after two months or so. They are slow to upgrade and built new Fabs, and happen to mispredict demand by HUGE margin. 28nm for example, even those who read the tech news would have some idea how hot these things will be. And yet TSMC are so unprepared and slow to react. 


     


    However when serious shxt happens, like Qualcomm decide to sign a deal with GF and Samsung, Nvidia threatens to move to GF etc, they reacted and prove they are more then capable in moving quickly, the latest news is their 28nm are up to 80% yield rate. That is a huge achievement in such a short time.


     


    So basically TSMC got great potential however their management lack visions. 


     


    And Oh, may be someday Intel will finally decide to Fab Apple's SoC...



    GF has had its own issues with AMD. forgot the technical details but apparently there are several different ways to make CPU's as to the order in which you burn the transistors onto the die. what's interesting is that you have to design the CPU according to the method you're going to use to manufacture it. AMD and GF were using incompatible methods and it caused problems and delays.


     


    other than the fact that Apple doesn't have their own CPU. they take Samsung's design and modify it. they can't just send their tapes to TSMC and order 100 million CPU's. there are lots of technical challenges to get around first

  • Reply 31 of 48
    quadra 610quadra 610 Posts: 6,756member


    Once Apple's bitch, always Apple's bitch - as long as Apple deems it convenient. Samsung needs to make money from orders. 


     


    Samsung's component division is doing their job. 

  • Reply 32 of 48
    sleepy3sleepy3 Posts: 244member


    What is all this talk of this CPU and THAT CPU?


     


    ALLLLLLL ARM chip makers license their design from ARM. Well, then again there is intel but whatever. A5, exynos, tegra3.....its all ARM Cortex A9. The only diff are in slight energy saving mods and of course the GPU. Samsung uses a stock ARM GPU in the exynos, so there was def no copying there. 


     


    As long as all CPU's are ARM designs, A9, A15, A7 whatever, there will always be hardly ANY diff between them once its the same generation. 


     


    OT, lets not forget that Samsung currently does not sell its exynos chips to customers other than a small chinese firm that sells about 5 phones a year. they have already said they plan to start selling it to other manufacturers in the future and with ARM chips showing up everywhere from phones to cameras, to media players, to tablets, to toasters, there can be a LOT of demand for chips and with your own foundry you have a huge advantage. 


     


    Nvidia, Qualcomm...they have to design their SoC THEN pay someone to make it. Samsung does it all in house and therefore can charge customers much less than the others. This seems more of a move to eventually squeeze out other companies from the SoC business. 


     


    Add to that Samsung is top memory manufacturer IN THE WORLD, and you have a pretty formidable business. How much longer before almost every chip on the market, be it a tegra, a snapdragon, an exynos, an a5x....has a "Made by Samsung" stamp on it?


     


    Sure Apple sells a lot of phones. But even IF they drop Samsung, Samsung would be a position where they would be fabbing chips for other phones anyway. Apple has what? 20% of the global market? And again, we are just talking phones. With Android in everything from TV's to cameras to picture frames (the instacube looks cool as hell) to anything under the sun, there are a LOT of chips to sell. Good going Samsung to see that opportunity. 


     


    And that's just android. We didn't even mention windows RT. 

  • Reply 33 of 48

    Quote:

    Originally Posted by sennen View Post


    Hmm, $4billion? Perhaps not a wise investment beyond the short-term.



     


    The chip fab division has gotta keep the green (or what ever color their money is) rolling in.  If you don't have a plant, you can't build the chip.   Apple is the big player, and wants capacity.   You don't say no to your best customer, even if the other part of your company is doing everything they can to beat Apple in the mobile game.


     


    I've said it in the past.   The Samsung SVP of chip production probably is stabbing his thigh in  strategy meetings when the CEO and the VP of mobile present the logical argument:   'Do we build 10M phones and make $200 a device, and risk Apple's wrath, or make  50M chips for Apple and make $5 per chip?  Logically if we can make them for $2 less, we can undercut all other Fabs,and Apple will still have to do business with us, even if we go to war on the phone/pad side.... Can you cut your profits by 40% to keep Apple happy?"

  • Reply 34 of 48
    nkalunkalu Posts: 315member


    I hope Apple will reduce her dependence on Samsung after all that has happened.


    Samsung is not a grateful partner. It's Sad.

  • Reply 35 of 48
    More chip plants being built helps apple in the long run. The point of the lawsuit is to get Samsung to think twice (at least once more) when copying designs. Apple can't stop them from making smartphones and probably doesn't want to. I think and hope Apple is still running on a change the world attitude. They don't need to destroy the competition, just the copy. Being better than the competition is the key and in the past Apple always felt they could be better. It was/is kinda the point. they didn't destroy Microsoft, but they have bested them in the long run. Any company can try to copy them not just Samsung. Not to say that there isn't some lost trust there I'm sure and that could mean some loss of business.
  • Reply 36 of 48
    jragostajragosta Posts: 10,473member
    emacs72 wrote: »
    Samsung Electronics' gross margins are less than 35% according to http://markets.ft.com/Research/Markets/Tearsheets/Financials?s=A005930:KSC

    Well, yes. If you include refrigerators, washers, driers, and other home appliances, their margins are low. But Apple isn't buying those products. Apple is buying semiconductor products from Samsung. Look at the middle of the page for information on gross margins on the type of products Samsung sells to Apple (Samsung is even mentioned by name).

    http://beta.fool.com/saintgermain/2012/08/20/semiconductor-industry-cycle-about-turn/10109/

    Of course, even if you were correct and the gross margin were only 35%, Apple would STILL contribute $4 B in margin this year - which is far too much for anyone to simply throw away without good reason. Samsung is not going to walk away from Apple's business and if Apple pulls the business away, it WILL hurt. (not that I expect either of those things to happen).
  • Reply 37 of 48
    quadra 610quadra 610 Posts: 6,756member

    Apple was Samsung's second-largest customer in 2010 with close to $5.7 billion in orders. 


     


    Apple in 2011 was Samsung’s largest customer, and spent over $7.8 Billion on parts.


     


    Today, Apple is Samsung's biggest customer, according to Bloomberg, accounting for 8.8% of Samsung’s revenue.


     


    Samsung needs to lose Apple like they need another hole in the head. 


     


    Samsung is a proven supplier. FOR NOW. 


     


    They have competition, because others want a piece of that sweet Apple pie:


     



     



     

  • Reply 38 of 48
    wizard69wizard69 Posts: 13,377member
    cnocbui wrote: »



    You're right, Samsung desperately needs Apple's chip design expertise, otherwise they never could have brought the Hummingbird to market, or their line of Exynos SOC's like the quad core one in the Galaxy S III, or their new ARM A15 cored Exynos 5 SOC or ..... er, er...

    Actually Samsung success with those processors is directly related to technology Apple owns through the purchase of Intrinsity a couple of years ago. Apple and Samsung worked hand in hand to develop those technologies into the ARM processors Samsung now manufacturs.

    As to the Samsung plant in Texas it is rumored that the plant was partially funded by a partnership and that it is possible that Apple was the partner or one of them. This is more rumor compare to the fact that Samsung used Intrinsity developed tech in their ARM processors.
  • Reply 39 of 48
    wizard69wizard69 Posts: 13,377member
    mausz wrote: »
    Quite right, but I have not heard of any apple products being delayed because of manufacturing problems with Samsung, the A4/A5/A5X are all deliverd in great numbers and meeting the quality demands Apple has. The new old ipad 2 is also getting the smaller lithography A5 SoC produced by Samsung without big problems. I have heard of numerous NVidia cards which were delayed because of TSMC problems. Also have heard of quality issues with LG/Sharp regarding iPad retina displays etc.

    This really isn't true, every manufacture except for Intel has had problems reaching the sub 32 nm nodes. This is why we still have the high power demand SoC in Apples products. It should be telling that the new iPad2, a limited production machine compared to iPhone and the new iPad, is the only products getting process shrunk A5's.
  • Reply 40 of 48
    wizard69 wrote: »
    Actually Samsung success with those processors is directly related to technology Apple owns through the purchase of Intrinsity a couple of years ago. Apple and Samsung worked hand in hand to develop those technologies into the ARM processors Samsung now manufacturs.
    As to the Samsung plant in Texas it is rumored that the plant was partially funded by a partnership and that it is possible that Apple was the partner or one of them. This is more rumor compare to the fact that Samsung used Intrinsity developed tech in their ARM processors.

    There is no question about Samsung's technical and supply chain capability. However, Samsung can be likened to a former buddy who:

    1. sleeps with your wife in front of you
    2. denies doing anything wrong
    3. accuses you of sleeping with his wife and therefore rationalizes it's a fair trade

    But yes, as we all already know, business is business.

    Off tangent I know, but this company's less than ethical practices simply disgust me.
Sign In or Register to comment.