Project Azalea: a $10 billion Apple mobile chip plant

By , Dec 12, 2012

We’ve suspected for a while now that Apple’s been making moves ultimately aimed at taking its chip contract elsewhere. Clearly Apple ain’t interested (any longer than it needs to) in letting Samsung enjoy an early peek at the technological solutions developed for the engine that drives its iPhones and iPads.

Currently, all of Apple’s in-house designed A-series processors are being built exclusively by Samsung in its $14 billion chip plant in Austin, Texas.

The iPhone maker was also rumored to be contemplating a switch to Intel’s x86 mobile chips for iPads, as outrageous as the very thought of it may seem.

But what if Tim Cook and his newly-minted chief of Technologies and long-time hardware expert Bob Mansfield have a radical solution in mind? A report Wednesday has it that the California firm could be seeking to invest up to ten billion dollars into a dedicated chip fab in New York, presumably in order to take control of its silicon destiny…

Larry Rulison, writing for the Albany Times Union (emphasis mine)

Since the fall, consultants representing a major high-tech manufacturer have been pitching New York economic development officials a plan for a 3.2 million-square-foot production facility that would likely cost as much as $10 billion to build.

Sites under consideration include Luther Forest Technology Campus in Malta, which is already home to a $4.6 billion computer chip factory, and a site in Oneida County next to SUNY IT.

Asked whether the Apple speculation was true, Governor Andrew Cuomo replied:

Well, we’re shopping a lot of different companies at any given time. Apple has a lot of competition, obviously, for their location. I don’t think that they’re anywhere yet in the decision-making.

The author notes that consulting firm Deloitte is conducting an international search for a suitable site for the facility for an unknown client. Even state and local officials are said to have been bound by strict non-disclosure agreements.


The fourth-gen iPad’s A6X chip under a microscope, courtesy of Chipworks.

He thinks that “whoever is behind Project Azalea wants to build the mega factory to satisfy Apple”.

There are two possible candidates.

Firstly, there is Foxconn, the world’s largest product assembler, a likely partner in Apple’s $100 million investment in bringing some of Mac manufacturing back home from China, where all Apple gadgets are being put together.

Foxconn CEO Terry Gou co-owns Sharp’s sophisticated IGZO display plant in Osaka, Japan.

He said back in June:

I invested in the Sakai 10th generation plant in my own name because some investors were concerned about investing in panels, that it might not be a good business.

The Sakai plant has an exclusive agreement with Corning on large panel supply; so our competitors won’t be able to secure any glass even if they want it.

And with all the talk surrounding a possible Apple-branded TV set, it’s easily conceivable that the two firms are building a display plant in the US for future television sets.

That “some LCD panel factories in Japan have cost nearly $10 billion to build” supports this notion.

Then there is Taiwan Semiconductor Manufacturing Company (TSMC).


Samsung’s Austin plant, where all of Apple’s iPhone and iPad processors are being fabbed.

We know Apple is eyeing the Hsinchu, Taiwan-headquartered semiconductor foundry as a possible candidate that could replace Samsung for mobile chips. Plans are apparently accelerating to begin making chips on TSMC’s 28-nanometer technology as early as the second half of next year.

We know TSMC refused Apple’s $1 billion dollar in exchange for exclusive access to its production output because the foundry didn’t want to upset its other major clients, namely Nvidia and Broadcom.

And, we also know that TSMC CEO Morris Chang is considering single-customer wafer fabs as some orders are so large they need their own dedicated fabs.

Taking it all in, it’s fairly safe to say there’s a reasonable likelihood of Apple considering a major investment into a dedicated manufacturing facility run by TSMC. It would get to churn out north of 200 million mobile chips Apple needs each year.

More importantly, the company could totally control the facility to ensure none of the newly developed technologies fall into wrong hands.

It could be a pipedream as running a semiconductor plant has enormous risks attached to it, but Mansfield & Co. “have some very ambitious plans”, per Tim Cook. Indeed, all Apple needs to further distance itself from Samsung and take total control over the engine of the iPhone and iPad is a chip plant of its own.

With $121 billion in cash, more than a thousand engineers strong silicon and wireless division and willingness to take bold bets, the iPhone maker certainly has resources to pull such a major brain transplant.

Does that sound like a viable possibility to you?

  • Share:
  • Follow:
  • http://www.GoldenGateDomains.com/ Golden Gate Domains

    Totally Possible – and completely Probable!!!

    P.S. Happy 12-12-’12 to all iDB friends! :-)

  • Obsidian71

    inevitable. Apple isn’t likely to shoulder the cost alone. I could see them going in with Foxconn and sharing the costs and risk. It’s clear that the ambitions of Apple mean making more and more of their own items and not bolstering the competition. This is a large but necessary step forward for the largest tech company in the world.

    • Lordthree

      With foxconn they take a risk that some of their investment could be used to make components for competing players. It’s not really a risk for Apple to shoulder most of the burden, it’s just a HUGE investment that will take a few years to pay off.

      • Falk M.

        That’s what a contract is for.

  • Ray V

    I had no idea Samsung was manufacturing chips right here in the US.

    • Obsidian71

      Yup the Austin plant is less than 2 years old I believe.

  • http://www.facebook.com/joe.jonsen Joe Jonsen

    apple need a 5 billion dollar plant to re design IOS so its not so damn boring..

    • http://www.facebook.com/edward.reyesdraper Edward Reyes-Draper

      believe me it won’t look boring