TSMC contracted to build A6X chips for Apple this quarter, pushing out Samsung

Posted:
in General Discussion edited January 2014
After years of rumors, Taiwan Semiconductor Manufacturing Co. is said to finally begin trial production of A6X chips for Apple's fourth-generation iPad this quarter, further marginalizing Samsung's role in Apple's supply chain.

TSMC has been contracted to manufacture the A6X chip found in the latest iPad, according to Taiwan's Commercial Times, via French news agency AFP. A report published on Wednesday said trial production of the mobile chips will begin in the first quarter of the year.

Apple has long been rumored to be interested in switching its mobile chip manufacturing from Samsung to TSMC. The iPad maker, which was once Samsung's biggest customer, has been looking to remove Samsung from its supply chain as the two companies are engaged in a number of patent infringement lawsuits around the world.

Recent reports had indicated that Apple planned to have TSMC begin producing mobile chips in 2013. But some reports pegged a late 2013 start date as more likely.

A6


With the latest rumor pegging TSMC's deal as only for trial production of the A6X, it's still unclear exactly when TSMC-produced chips could begin appearing in Apple's iOS devices. Currently, all of the mobile processors used in the iPhone, iPad, iPod touch and Apple TV are built by Samsung at its chip fabrication plant in Austin, Tex.

Switching its chip manufacturing from Samsung to TSMC is expected to be a complex transition that could take Apple as long as 18 months to complete.

Rumors that surfaced last month pegged TSMC has the most likely company behind a mysterious "Project Azalea" that numerous states are competing to win. The secretive project involves an unnamed semiconductor manufacturing company considering a new chip fabrication plant in four potential states: New York, California, Texas and Oregon.

The chip manufacturer behind the "Azalea" project is said to have ties to Apple, which has led numerous reports to suggest TSMC as the most likely company behind the mystery project. The states bidding for the contract have signed nondisclosure agreements, making the company unknown.
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Comments

  • Reply 1 of 33
    dgnr8dgnr8 Posts: 196member


    Before this is all said and done, Apple customers will feel the pain of the transition.


     


    Samsung will make this as painful as possible, they have nothing to lose by compromising Apples production volume.


     


    I have a feeling this will be a rough year for Apple with the transitions of suppliers and with the company still continue to find it's legs without Mr. Job's.


     


    I am sure I am not the only one to notice that Apple seems to have lost a bit of luster to it's shine.


     


    Product leaks prior to debut, extremely long leads time well past the holiday buying season after debut and in my opinion a drop in service quality I had come to expect from Apple. 


     


    I think Mr. Cook has a lot of issues to address before things get back to Apple normal.

  • Reply 2 of 33
    ksecksec Posts: 1,562member

    Quote:

    Originally Posted by DGNR8 View Post


    Before this is all said and done, Apple customers will feel the pain of the transition.


     


    Samsung will make this as painful as possible, they have nothing to lose by compromising Apples production volume.



     


    No. There is a contract to fulfil. It isn't painful at all. If there will be any pain it will be TSMC causing Apple. Not Samsung.


     


    Note: The Story produces error on the front page.....

  • Reply 3 of 33
    dgnr8dgnr8 Posts: 196member


    Your response is as if Samsung is an honorable company.


     


    I do think they will fulfill their contract however whats to stop them making life hard for Apple and Apple customers.


     


    They can come up with delays, questionable product runs ect.


     


    We are not talking about two American companies that have to follow the same jurisdictions, just look at what Samsung does every time Apple releases a new product 6 months later Samsung has a knockoff.


     


    They have the protection of the Korean Government so this would be a long drawn out court battle not unlike the iPhone.


     


    I do not think Mr. Cook is looking for round two of legal action with Samsung rather I believe he would just like to separate from Samsung even it is a bit painful.


     


    So back to Samsung, why would you think they would be any less dishonest with Apple beginning to pull away large volume purchases in 2013.

  • Reply 4 of 33


    Is this related to the report from Citi citing cuts in orders from suppliers? Or are they 2 unrelated events altogether? image

  • Reply 5 of 33
    Until TSMC actually have a US fab, this is bad news for the drive to build in the USA.
  • Reply 6 of 33
    lkrupplkrupp Posts: 7,149member

    Quote:

    Originally Posted by DGNR8 View Post


    Before this is all said and done, Apple customers will feel the pain of the transition.


     


    Samsung will make this as painful as possible, they have nothing to lose by compromising Apples production volume.


     


    I have a feeling this will be a rough year for Apple with the transitions of suppliers and with the company still continue to find it's legs without Mr. Job's.


     


    I am sure I am not the only one to notice that Apple seems to have lost a bit of luster to it's shine.


     


    Product leaks prior to debut, extremely long leads time well past the holiday buying season after debut and in my opinion a drop in service quality I had come to expect from Apple. 


     


    I think Mr. Cook has a lot of issues to address before things get back to Apple normal.



    It's the "Debbie Downers" of this world that are the problem, not Apple or Samsung. Self-fulfilling prophesies of doom and gloom have killed many businesses and economies.

  • Reply 7 of 33
    lkrupplkrupp Posts: 7,149member

    Quote:

    Originally Posted by realwarder View Post



    Until TSMC actually have a US fab, this is bad news for the drive to build in the USA.


    No.

  • Reply 8 of 33
    jragostajragosta Posts: 10,473member
    dgnr8 wrote: »
    Before this is all said and done, Apple customers will feel the pain of the transition.

    Samsung will make this as painful as possible, they have nothing to lose by compromising Apples production volume.

    Nothing to lose? You don't think Apple would sue them into oblivion if they violate their supply contracts?
  • Reply 9 of 33
    patsupatsu Posts: 429member
    In the long run, it is better to have multiple strong suppliers/companies than one strong, unscrupulous supplier.
  • Reply 10 of 33

    Quote:

    Originally Posted by ksec View Post


     


    No. There is a contract to fulfil. It isn't painful at all. If there will be any pain it will be TSMC causing Apple. Not Samsung.


     


    Note: The Story produces error on the front page.....





    ... and what does that contract say. Nobody knows. Terms of the contract could allow Samsung to work to rule with no overtime or no increased production.


     


    I do agree, though, that Apple could be opening up a bag of hurt if there is a transition to TSMC for its chips.


     


    As far as Samsung being sued... that threat doesn't seem to bother them.

  • Reply 11 of 33
    cmvsmcmvsm Posts: 204member
    James Song, a Korean analyst, was saying just last year that "Apple needs Samsung to make the iPhone and iPad. Samsung is the sole supplier of chips, and without Samsung, they can't make these products"

    I guess Mr. Song, as well as the rest of Samsung, underestimated both Apple and other 3rd party suppliers, as Apple is doing just that. Might take a bit of time to get the wheels rolling, but Samsung will certainly feel it, in more ways than one, once the transition is completed.

    I hope the infringement was worth every penny Samsung. You just lost 8.8% of annual revenue, with $2.1 billion worth of chips alone. This is business that cannot easily be replaced, if at all. This also does not account for the added competition TSMC will be adding in the US due to their manufacturing facility, as well as new customers that will second guess doing business with Samsung due to reputation of design and software patent infringement. If Samsung will do it to their largest customer, then why would they think twice to do it to a smaller one?
  • Reply 12 of 33


    Apple used to have this problem of always announcing products and then having delays before actually shipping as well a supply problems. Ironically, I think it was Cook who largely fixed these.

  • Reply 13 of 33
    alandailalandail Posts: 689member

    Quote:

    Originally Posted by DGNR8 View Post


    Before this is all said and done, Apple customers will feel the pain of the transition.


     


    Samsung will make this as painful as possible, they have nothing to lose by compromising Apples production volume.


     


    I have a feeling this will be a rough year for Apple with the transitions of suppliers and with the company still continue to find it's legs without Mr. Job's.


     


    I am sure I am not the only one to notice that Apple seems to have lost a bit of luster to it's shine.


     


    Product leaks prior to debut, extremely long leads time well past the holiday buying season after debut and in my opinion a drop in service quality I had come to expect from Apple. 


     


    I think Mr. Cook has a lot of issues to address before things get back to Apple normal.



     


    Smasung has other customers, if they screw one over like this, they risk losing the business of others.

  • Reply 14 of 33
    gazoobeegazoobee Posts: 3,754member

    Quote:

    Originally Posted by DGNR8 View Post


    Before this is all said and done, Apple customers will feel the pain of the transition.


     


    Samsung will make this as painful as possible, they have nothing to lose by compromising Apples production volume.


     


    I have a feeling this will be a rough year for Apple with the transitions of suppliers and with the company still continue to find it's legs without Mr. Job's.


     


    I am sure I am not the only one to notice that Apple seems to have lost a bit of luster to it's shine.


     


    Product leaks prior to debut, extremely long leads time well past the holiday buying season after debut and in my opinion a drop in service quality I had come to expect from Apple. 


     


    I think Mr. Cook has a lot of issues to address before things get back to Apple normal.



     


    There's a lot of emotion in this post, but there isn't much fact to base it on.  

  • Reply 15 of 33
    gazoobeegazoobee Posts: 3,754member

    Quote:

    Originally Posted by cmvsm View Post



    James Song, a Korean analyst, was saying just last year that "Apple needs Samsung to make the iPhone and iPad. Samsung is the sole supplier of chips, and without Samsung, they can't make these products"

    I guess Mr. Song, as well as the rest of Samsung, underestimated both Apple and other 3rd party suppliers, as Apple is doing just that. Might take a bit of time to get the wheels rolling, but Samsung will certainly feel it, in more ways than one, once the transition is completed.

    I hope the infringement was worth every penny Samsung. You just lost 8.8% of annual revenue, with $2.1 billion worth of chips alone. This is business that cannot easily be replaced, if at all. This also does not account for the added competition TSMC will be adding in the US due to their manufacturing facility, as well as new customers that will second guess doing business with Samsung due to reputation of design and software patent infringement. If Samsung will do it to their largest customer, then why would they think twice to do it to a smaller one?


     


    Totally agree.  


     


    What I find interesting too is that long before the Samsung copying became a problem, Apple was already making moves to create it's own chips and to (semi)-own it's own fabrication plants through agreements with Foxconn and payments to manufacturing facilities that protect their bottom line.  If instead they had only realised halfway through the battle that they need to move towards making their own chips, it would be years from now before that could even happen.  If they hadn't made those decisions earlier, Samsung actually would have the upper hand here and Apple actually would need Samsung to the point that they might have to drop their court cases and swallow some humble pie.  


     


    I love how even when Apple isn't actively winning the game, they still out-think and out-manouvre their opponents so that they will be winning the game down the road anyway.  


     


    I also find it interesting that the party line on Apple moving it's chip business away from Samsung is that Samsung this year, is that Apple will only move 50% of it's business away and that Samsung will somehow find other orders to make up the difference.  When Apple removes the final 50% the next year, Samsung is predicted to be able to make up 47% of that as well.  All this is based on some wild assumptions and a bit of a hope and a prayer, but it's still being passed around as gospel in financial sectors.  


     


    I think it more likely that Samsung will lose 100%of Apple's business in a very short time frame (the shortest Apple can manage), and that it will be difficult for them to fill even half the volume.  It's not like Windows phones are taking off so well that there is some burgeoning new market, or hot new product to supply.  Which players are going to switch their business away from wherever they are now to fill Samsung's order sheet?  I don't see it.  

  • Reply 16 of 33

    Quote:

    Originally Posted by DGNR8 View Post


    Before this is all said and done, Apple customers will feel the pain of the transition.


     


    Samsung will make this as painful as possible, they have nothing to lose by compromising Apples production volume.


     


    I have a feeling this will be a rough year for Apple with the transitions of suppliers and with the company still continue to find it's legs without Mr. Job's.


     


    I am sure I am not the only one to notice that Apple seems to have lost a bit of luster to it's shine.


     


    Product leaks prior to debut, extremely long leads time well past the holiday buying season after debut and in my opinion a drop in service quality I had come to expect from Apple. 


     


    I think Mr. Cook has a lot of issues to address before things get back to Apple normal.



    I believe you don't know what you are talking about.


     


    It's not personal, but if you are buying something because of "luster to it's shine" you understand 0 about it, and should not make opinions on the matter. The difference between Apple's products and the competition was never as big as it is now. 

  • Reply 17 of 33


    Originally Posted by DGNR8 View Post


    They have the protection of the Korean Government so this would be a long drawn out court battle not unlike the iPhone.



     


    This is truly meaningless. Suits about manufacturing are something Samsung cannot afford. No amount of money will bring back trust when a supplier has broken it.


     



    Originally Posted by island hermit View Post

    ... and what does that contract say. Nobody knows. Terms of the contract could allow Samsung to work to rule with no overtime or no increased production.


     


    So you don't imagine that was covered when the contract was signed however many years ago? Terms don't magically change near the end, particularly since this wasn't really a concern back then.





    As far as Samsung being sued... that threat doesn't seem to bother them.




     


    This is entirely different from any lawsuit they've had before. 

  • Reply 18 of 33

    Quote:

    Originally Posted by Tallest Skil View Post


    So you don't imagine that was covered when the contract was signed however many years ago? Terms don't magically change near the end, particularly since this wasn't really a concern back then.



     


    So you are saying you know what the contract says, how many units were accounted for, when it ends and all the other details.


     


    Please... elaborate.


     


    [it sounds like you don't even know when the contract was signed or if it is the same contract year after year]

  • Reply 19 of 33

    Quote:

    Originally Posted by Tallest Skil View Post


    This is entirely different from any lawsuit they've had before. 



     


    Maybe, depending on the details in the contract, Samsung will take it even less seriously.

  • Reply 20 of 33


    Originally Posted by island hermit View Post

    So you are saying you know what the contract says, how many units were accounted for, when it ends and all the other details.


     


    Nope.


     




    [it sounds like you don't even know when the contract was signed…




     


    Do you? 






    …or if it is the same contract year after year]



     


    Would it move that quickly? I'd think they'd have longer terms.

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