Analysts are confident that TSMC will grab 100% of Apple’s chipset business in 2016

TSMC (Taiwan facility 001)

Although the present-generation A9 and A9X processors are being built by both Taiwan Semiconductor Manufacturing Company Limited (TSMC) and Samsung, it appears that Samsung will be left out entirely from the lucrative contract to build the forthcoming A10 chipset for 2016 iOS devices.

Barron’s on Thursday cited analyst Bonil Koo with investment bank UBS as saying that all A10 orders will be exclusively handled by TSMC, posing a major problem for Samsung.

InFO packaging

TSMC is thought to be using InFO technology—which is not reliant on IC substrates (more on that in my analysis here)—to package A10 chips on the next iPhones’ motherboards.

“We believe TSMC could have close to a 100 percent market share in Apple’s new A processor (A10) foundry service in 2016 and use its Integrated Fan-Out (InFO) technology for packaging,” the analyst wrote.

InFO technology would benefit the next iPhone (iPhone 7?) by providing better performance with smaller form factors. “We expect Fan-Out (FO) technology to be adopted over time by other application processors and system-on-chip vendors, which could include Samsung LSI,” Koo continued.

Major blow to Samsung

If true, that’d be a major blow to Samsung as its semiconductor division, which counts Apple as its top client, is credited with single-handedly improving the company’s bottom line amid declining smartphone and tablet sales.

Back in September, rumors began swirling that TSMC was commissioned by Apple to manufacture Apple’s next-generation A10 mobile chipset.

The following month, a JP Morgan analyst piggy-backed on the report, predicting that TSMC would indeed grab 100 percent of Apple’s mobile chipset orders in 2016.

Image: TSMC’s facility in Taiwan

Source: Barron’s