The iPhone 5 comes with a brand new Apple-designed A6 chip for a twofold jump in CPU/GPU performance. In fact, the iPhone 5 could easily be the first ARM Cortex-A15 smartphone on the market. The A6 is likely manufactured on Samsung’s 32-nanometer process, but probably not for long as Apple has been looking to take its chip contract elsewhere.

There ain’t many places to go: Intel sucks at power management and Samsung is #2 chip vendor in the world. Taiwan Semiconductor Manufacturing Company (TSMC), however, is the world’s largest dedicated independent semiconductor foundry and Apple could be closer than previously thought to shifting production contracts away from Samsung and towards TSMC.

Can you say “stock plunge”?

According to the somewhat reliable DigiTimes (they’re good at semiconductor and supply chain news), back chatter in Asia suggests that Apple and TSMC are “about ready to enter the design-in phase”.

The report also goes on to note that Apple is believed to have “reduced its orders with Samsung and raised the proportion of purchases from other suppliers including SK Hynix, Toshiba and Elpida Memory”.

The claimed iPhone 5 logic board that leaked 24 hours ahead of Apple’s keynote shows NAND flash chips by SK Hynix, a long-time Apple supplier. And back in May, Samsung denied rumors asserting Apple had secured half the manufacturing output from Elpida, the third-largest maker of dynamic random access memory chips.

“Apple is definitely using our chips”, an unnamed Samsung executive allegedly said.

IHS iSuppli estimates Apple could sell as much as 149 million iPhones and about 60 million iPads in the calendar year 2012. That’s a lot of chips to make – 209 million iPhone and iPad processors, to be precise.

And why is this important?

Because the $1 billion in damages a U.S. judge awarded to Cupertino in the high-profile Apple v. Samsung case could be a drop in the bucket compared to billions in lost orders should Apple take its chip contracts elsewhere.

Samsung is safe so far and even dropped $4 billion towards renovating its Austin, Texas plant in order to boost production of ARM-based chips, mainly for Apple, its biggest client.

DigiTimes wrote back in May that TSMC has a “good chance” of winning Apple’s chip biz in 2014. Apple is thought to be moving chip production to TSMC’s 28-nanometer process, but the semiconductor foundry is currently struggling to provide sufficient capacity to its existing 28nm customers.

Today’s report states that TSMC’s 16-nanometer double-gate FinFET process could be Apple’s most likely choice.

Note that TSMC already makes Qualcomm’s 4G LTE baseband package used inside the iPhone 5, generating an estimated ten bucks in per-device revenue for TSMC (see the full iPhone 5 bill of material estimate here).

TSMC also provides foundry services for other iPhone component suppliers such as Broadcom, STMicroelectronics, NXP and OmniVision.

Qualcomm and Apple both offered $1 billion for exclusive access to TSMC’s production output, but the company turned down the offers to “retain control of its plants”, its finance chief adding that TSMC “doesn’t want to sell part of itself and doesn’t need cash for investments”.

The way I read this: Samsung will build one more iteration of the iPhone and iPad processor (perhaps the A6X) and TSMC gets to build the A7 chip that should go into 2014 iOS devices.

Or, Apple could be simply looking to diversify its supplier base.

Either way, it will be Samsung’s loss.

Make sense?

  • good….good (in my family guy evil bug voice)

  • Yep … You said it …


    APPLE’s success is based on its guts being made Samsung.. Apple who is your daddy?

    • no not all most parts come from a variety of manufactures now, Apple just dropped Samsung for the NAND flash memory chips and RAM. Now its just the processor being made by Samsung. In fact apple is responsible for 10% of Samsungs profit

      1. South Korea’s Samsung Electronics Co. Ltd. makes the main processor

      2. The processor is based on an architecture licensed from Britain’s ARM Holdings Plc

      3. Germany’s Infineon Technologies supplies the phone’s transceiver and baseband processor

      4. Britain’s Wolfson Microelectronics Plc makes the audio processing chip. Wolfson already supplies audio chips for Apple’s popular iPods *

      5. U.S.-based Marvell Technology Group Ltd. makes the Wi-Fi chip that allows the iPhone to connect to the Internet wirelessly *

      6. Skyworks Solutions Inc. supplies the cellular network power amplifier *

      7. Britain’s CSR Plc makes the Bluetooth chip that supports wireless accessories such as microphones *

      8. Linear Technology Corp. supplies the USB battery charger, a part that is also used in iPods

      9. Broadcom Corp. , privately held NXP Semiconductors and National Semiconductor Inc. make components to support the touch screen

      10. Micron Technology Inc. makes image sensor for the iPhone’s camera

      11.Other components were supplied by Texas Instruments Inc. , Europe’s STMicroelectronics Silicon Storage Technology Inc. and RF Microdevices Inc.

    • David Villamizar

      Samsung only produces the chip, Apple creates it, so Samsung is to make it practical, apples employee.

      • Doesnt apple just say what they want and make samsung mass produce? Hard to see apple creating an actual component

      • BoardDWorld

        You obviously don’t read up on who Apple employs, they have under their wing a couple of heads from both IBM and Samsung.

      • Dont really see your point there bro

      • David Villamizar

        if you read the comment by maxim down here, you’ll learn that Apple designs the chip and Samsung makes it.
        Samsung have the factory to produce these chips, Apple has the mind to imagine them.
        Of course I have to mention that some things like the RAM are made and designed by Samsung, but they are paid for it, so don’t come with things like the iPhone is a Samsung achievement because it’s not.

      • Nothing my post says anything about iphone being a samsung achievement. Get glasses

  • rohta

    “Intel sucks at power management”. You surely have no idea what you said and for sure you don’t know peanuts about semiconductor industry. Intel problem is the x86 legacy, not the manufacturing process.

    Intel is by far the most capable company in developing and put in high volume at high yield advanced technology nodes. The reason why Apple cannot use Intel’s fabulous manufacturing muscle and expertise is because Intel uses almost all of its manufacturing volume just to produce its own products. And everybody knows that the entire world uses Intel CPUs.

    Intel is in foundry business only for relative low volume production and that’s the reason why only unknown companies, such as Netronome, is Intel’s customer. If Apple could have Intel as its chip manufacturer, it would be perfect. After all, both companies are american, and Intel is always one step ahead in terms of technology node for logical chip.

  • Johnathan Jennings

    That’s one fast dual core processor(:

  • Send it to Freescale they were good (Motorola semi inc.) for the PowerPC platform

  • I thought this would be inevitable given the problems in the relationship between the two companies on the device scale.

  • The TSMC much more great than Samsung about the Semiconductor Manufacturing. I’m very glade to see this change.

  • Miras safadi

    Apple should hire a microproccessor engineering team from difirent plants and use them to build their microproccessors.