TSMC reportedly wins exclusive contract to build A11 chips for 2017 iPhones and iPads

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Citing a story in the Chinese-language Economic Daily News newspaper, Taiwanese trade publication DigiTimes reported yesterday that Taiwan Semiconductor Manufacturing Company (TSMC) will be the sole supplier of an Apple-designed ‘A11’ chip, which should power 2017 iPhone and iPad models.

In other words, Samsung could be on the outs for the next two generations of iPhone processors as both this year’s A10 and next year’s A11 are now said to be exclusively manufactured by TSMC. The A11 chip will be built on the foundry’s cutting-edge ten-nanometer FinFET process.

TSMC could begin small-volume production for the A11 chips as early as the second quarter of 2017, the sources were quoted as saying in the report. TSMC co-CEO Mark Liu said at a recent investors meeting, without naming Apple, that “our first 10-nanometer customer product has been produced with satisfactory functional yield.”

TSMC’s new 10-nanometer process is expected to start generating revenues in the first quarter of 2017, and revenues “will ramp steeply throughout 2017,” according to Liu. The current A9 and A9x chips for the iPhone 6s series, iPhone SE and iPad Pro are dual-sourced from TSMC and Samsung.

Meanwhile, Samsung Electronics’ System LSI Business Department has entered “a state of emergency” amid news that Apple chose TSMC, its rival, to build the A10 and A11 chips, according to another report out of Korea this morning.

“It is also important for Samsung Electronics to plan out high-intensity innovations so that it can take back Apple’s supplies” in the emerging seven-nanometer process technology. For now, however, it’s all bad news for Samsung and “it’s going to be hard to be profitable in 2016 without Apple’s orders for the A10,” as per the report.

Samsung may dampen the blow of losing the A10 business as it announced becoming the sole manufacturer of Qualcomm’s new flagship mobile chip, the Snapdragon 820, which could add $1 billion to its bottom line at TSMC’s expense.

TSMC recently spent NT$1.08 billion (circa $34 million) on new manufacturing equipment and told the press it saw no immediate impact from Softbank’s announced intent to buy UK fabless semiconductor maker ARM Holdings plc for a reported $32 billion.

ARM used to provide CPU blueprints for Apple’s A-series mobile chips until the Cupertino firm started designing its own, fully customized 64-bit CPU cores starting with the A7 chip three years ago.

Photo courtesy iFixit.com.

Source: DigiTimes