Samsung seen gradually losing Apple chip orders

By , Nov 7, 2012

Apple, which up until recently was responsible for nearly nine percent of Samsung’s revenue in parts orders, is rumored to be gradually taking its lucrative mobile chip contract away from Samsung, as previously speculated.

A new report out of Asia tells us the South Korean conglomerate is likely to delay construction of a new logic fabrication facility over fear that it will no longer make Apple’s in-house designed processors for iPhones, iPads and iPods on an exclusive basis.

If this is true, then Apple has already contracted another founry to produce the chips, most likely Taiwan Semiconductor Manufacturing Company (TSMC)…

The somewhat reliable DigiTimes, an Asian industry trade publication, reported this week that the anticipated drop in chip orders from Apple has prompted Samsung to consider slowing the pace of the capacity expansion, announced back in June 2012.

Apparently, TSMC, the world’s largest dedicated independent semiconductor foundry, will take it from there.

TSMC with its 20nm process technology will likely secure its first chip orders from Apple, the sources believe. TSMC is scheduled to enter trial production on its 20nm process node in early 2013, the sources said.

The source specifically mentions that “Samsung will no longer be the sole supplier” of Apple-designed chips. Samsung’s planned facility called Line-17 will have 20nm and 14nm process nodes.

Located in Hwaseong, Gyeonggi Province and worth more than $5 billion, it’s due to kick off volume production in the first quarter of 2014 and bring in an additional 80,000 twelve-inch wafers in capacity per month.

TSMC, whose headquarters and main operations are located in the Hsinchu Science and Industrial Park in Hsinchu, Taiwan, should become the sole supplier of quad-core mobile chips for Apple by 2014, analysts told  Chinese Economic News Service, echoing older rumors.

Currently, Apple-designed processors that power iOS devices are fabbed on Samsung’s 32nm CMOS process in Austin, Texas. Apple is thought to have opted for TSMC because of its “unmatched technological advance on 20nm process”.

However, moving from Samsung’s 32nm High-κ metal gate (HKMG) architecture to a totally different fabbing process comes with significant risks and potential pitfalls, including low yield rates, faulty chips and hardware errors that may end up costing billions to fix, to name a few.

Let’s hope Apple knows what it’s doing.

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  • Ignacio Irigoyen

    I really hope Apples reason for doing this is not out of spite but rather looking for better technology and ganing an edge against Android phones

    • CollegiateLad

      Double post

    • CollegiateLad

      Apple doesn’t need Samsung anymore as evidenced by the A6 and A6X. The iPhone 5 mops the floor with both the Nexus 4 and Nexus 10. Go to AnandTech and check out the comprehensive review – it’s embarrassing. The 4 gen iPad is on another planet completely.

      Keep in mind, these are quad core devices we’re talking about. A6 and A6X said no problem. We got this.

      • Ignacio Irigoyen

        Yea, but we are not talking about need Samsung to design new chips, but up until now they use Samsung to build them. What I’m saying is that I hope that by changing Samsung as a manufacturer that does not impact the quality of the chips.

        Also that by using TSMC they bring to the table the ability to manufacture more complex and small designs while keeping cost under control.

      • CollegiateLad

        My chip seems fine. But I understand your concern.

      • http://www.facebook.com/profile.php?id=1849765376 Jordan Rushing

        You can’t believe everything you read on the internet…

  • http://twitter.com/oneBurge Burge

    I still couldn’t believe that Apple was buying parts from its biggest rival to start with.. Why on earth should anyone want to line the pockets of the competition…

  • http://twitter.com/MattGMckenzie Matt ✵ McKenzie

    I feel some of Apples decisions as of late are based on emotion rather than sense.