Apple chip supplier TSMC says earthquake damage will have bigger impact than expected

AppleInsider · February 15, 2016 3:08PM

The damage to Apple chip supplier TSMC from a Feb. 6 earthquake was reportedly more severe than estimated, and will indeed result in fewer wafers shipping to clients during the March quarter.

The setback will be more than 1 percent, though the company didn't quantify by how much, DigiTimes said on Monday. While machines in TSMC's Fab 6 and Fab 14B buildings have already been restored, the damage to Fab 14 was worse than thought.

In the immediate aftermath of the quake, TSMC claimed that shipments would fall less than 1 percent. The company suggested, in fact, that it would be able to make up for any losses.

In human terms, the disaster killed at least five people in Taiwan, and injured 144 more. Some 220 people had to be rescued from damaged buildings.

TSMC splits the responsibility of making A9 processors for Apple devices (like the iPhone 6s) with Samsung, taking a secondary role. It is however rumored to be assuming full control of "A10" production for devices like the next-generation "iPhone 7," shipping later this year. If so the company will likely need maximum output to keep up with demand -- Apple regularly ships tens of millions of iPhones in a single quarter.

slprescott · February 15, 2016 3:17PM

Samsung will use this as a proof-point in negotiations with Apple: "You need to continue dual-sourcing CPUs to reduce the risk of your sole supplier's production interruptions jeopardizing your own revenue stream." And that's true.

lkrupp · February 15, 2016 3:34PM

Oh boy, the tech blogosphere will light up over this one. Apple is Doomed™

wood1208 · February 15, 2016 3:47PM

TSMC needs to build backup Fabs outside of Taiwan in part of Europe or USA. TSMC don't want to give Samsung or anyone opportunity to come-in take away current or future business. I am sure this will not affect iPhone 7, 10nm A10 production which is several months away.

edited February 2016

rayz2016 · February 15, 2016 3:59PM

I still don't believe the single-source rumour. Even without the earthquake, it's doubtful that TSMC had the kind of capacity Apple needs for an iPhone launch.

Time will tell (but Tim won't).

spamsandwich · February 15, 2016 4:04PM

If it's not one thing, it's another. Apple can't win no matter how big the profits.

rob53 · February 15, 2016 4:09PM

TSMC's official website in english is http://www.tsmc.com/english/default.htm. As most of us know DigiTimes isn't the best place to find information. TSMC does not have any information on their front page that says their production setback will be 1%. Their latest news is today 2/15/2016 and includes their revenue update. The information DigiTimes published might be accurate but it also could have come from an unidentified source.

foggyhill · February 15, 2016 4:14PM

So, were the hell does that"news" come from. Seems like some stock manipulation play if you ask me.

gmgravytrain · February 15, 2016 5:01PM

How did that earthquake manage to find only the factory that manufactures the heart and soul of Apple's key products and left all the other factories untouched? I think it must be an omen for shareholders to dump Apple stock. I'm guessing that 1% production setback is serious enough to put Apple out of business or at least delay someone's iPhone by a week. OMG! Apple put all of its eggs in one basket and someone dropped the damn thing. What was Tim Cook thinking? Does he like running around with scissors in his hand? Time to panic. /s

gmgravytrain · February 15, 2016 5:06PM

slprescott said:

Samsung will use this as a proof-point in negotiations with Apple: "You need to continue dual-sourcing CPUs to reduce the risk of your sole supplier's production interruptions jeopardizing your own revenue stream." And that's true.

I don't think we really know for certain if Apple isn't second-sourcing A-series processors. We shouldn't believe all the BS that these bloggers write. I'm certain Tim Cook has said in the past he would never totally rely on one company for components because the risk would be too high. Tim Cook was a supply chain specialist and knows things like this can happen so I'm sure he didn't turn stupid overnight.

eideard · February 15, 2016 5:30PM

Terrific accuracy - since the death toll is more like 116 -- not 5.

foggyhill · February 15, 2016 5:45PM

It's funny how this "rumor" occured just after the ones of Apple ditching Samsung for TSMC.... There is some weird stock supporting thing going on there.

cnocbui · February 15, 2016 6:12PM

foggyhill said:

It's funny how this "rumor" occured just after the ones of Apple ditching Samsung for TSMC.... There is some weird stock supporting thing going on there.

The 'rumour' is being attributed as a statement by the company itself, so that would make it more of an official announcement with no room for doubt as to its verracity.

rob53 · February 15, 2016 6:55PM

cnocbui said:

foggyhill said:

It's funny how this "rumor" occured just after the ones of Apple ditching Samsung for TSMC.... There is some weird stock supporting thing going on there.

The 'rumour' is being attributed as a statement by the company itself, so that would make it more of an official announcement with no room for doubt as to its verracity.

Veracity aside, until I see an actual statement from TSMC I'm going to take what I read from DigiTimes with a huge grain of salt. Just because someone said someone at TSMC said something doesn't mean it's the truth or was or wasn't taken out of context.

No, everything on the Internet isn't the truth.

macky the macky · February 15, 2016 6:56PM

This kind of wafer production doesn't do well with the earth doing a bump and grind underneath the equipment. It wouldn't surprise me of all pending production had to be tossed for QC reasons.

macpro · February 15, 2016 9:29PM

wood1208 said:

TSMC needs to build backup Fabs outside of Taiwan in part of Europe or USA. TSMC don't want to give Samsung or anyone opportunity to come-in take away current or future business. I am sure this will not affect iPhone 7, 10nm A10 production which is several months away.

Along similar lines, I wonder, when western California splits off from the main land, if Apple have a contingency plan.

edited February 2016

michael_c · February 15, 2016 10:18PM

digitalclips said:

wood1208 said:

TSMC needs to build backup Fabs outside of Taiwan in part of Europe or USA. TSMC don't want to give Samsung or anyone opportunity to come-in take away current or future business. I am sure this will not affect iPhone 7, 10nm A10 production which is several months away.

Along similar lines, I wonder, when western California splits off from the main land, if Apple have a contingency plan.

Nice pic effect - wait a minute, ... I live minutes from the campus! Maybe not so nice :~}

macpro · February 15, 2016 11:29PM

michael_c said:

digitalclips said:

Along similar lines, I wonder, when western California splits off from the main land, if Apple have a contingency plan.

Nice pic effect - wait a minute, ... I live minutes from the campus! Maybe not so nice :~}

Then maybe you can make it to the Apple escape pods in time!

cnocbui · February 15, 2016 11:33PM

They could build their backup facilities in Australia, then they would probably outlive the human species before anything bothered them there.

jdgaz · February 16, 2016 2:17AM

Excellent spot for a TSMC fab on Price Road in Chandler AZ.

mattinoz · February 16, 2016 4:08AM

cnocbui said:

They could build their backup facilities in Australia, then they would probably outlive the human species before anything bothered them there.

We don't have Nuclear power to drive a fab but we do have really good sand and buckets of exotic metals.
So it would be good way to get Apple dollars moving around our economy more before they go overseas.

Apple chip supplier TSMC says earthquake damage will have bigger impact than expected

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