Apple Dropping Samsung for A5 Chip Fabrication

| Rumor

Apple has apparently started turning away from Samsung for its custom chips in favor of Taiwan Semiconductor Manufacturing Company. According to unnamed sources, Apple is using TSMC to build the A5 chips used in the new iPad 2.

A5 chipTSMC may be making iPad processors

EE Times reports Apple is still using Samsung for its A4 chip production for the iPhone 4 and original iPad. Both the A4 and A5 were designed by Apple for its own products.

Distancing itself from Samsung’s chip fabrication service makes sense because Apple considers the company a competitor in the smartphone and tablet market. TSMC also has the ability to produce more chips for Apple than Samsung can manage with its facilities.

Assuming the report that Apple is working with TSMC are correct, it’s also possible that the deal is only to supplement Samsung’s production. Analysts have been ramping up their iPad 2 order estimates, and if they’re accurate, Apple could need more processors than Samsung can deliver.

Apple doesn’t comment on rumors, so there isn’t any official word on which company will be delivering A5 chips in the long term. Considering Apple sees Samsung as a competitor, however, it seems likely that its future chip orders will be limited to RAM.

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Comments

Nemo

There is no point in enriching a competitor, which is what Samsung is, if there is an alternative manufacturer, nor is there any point exposing your IP to that competitor.  So, since Samsung is competing against Apple in mobile devices, I think that we can expect to see it manufacturing less and less for Apple.

Peter

That’s what you think. But in the business world, it doesnt run like that.

Perhaps Apple would want to move away from purchasing Samsung’s memory, display, IC controls as well? Because “its a competitor” afterall.

daemon

@Nemo So when will Apple stop using competitor’s IP?

IP

zeth006

Hmmmm, I don’t think it’s so simple. This isn’t just another Mac vs. Rest Risk-style game. A lot more factors are in play.


Other articles on the web mention the competition between Apple and Samsung as just one reason among few. Other reasons include the fact that TSMC has higher chip manufacturing capacity than Samsung’s foundry business does. I’m sure we’re aware of the supply issues Apple had. NAND flash memory prices haven’t dropped by much and capacity is actually near max. Plus let’s not forget that TSMC can manufacture processors at the 40nm node. That’s a huge deal in terms of cost savings and efficiency overall. Finally, Samsung Foundry wasn’t even established until 1-2 years ago. TSMC has been in the business far longer.


I’d wait a few months to see what this really means. This will certainly be a blow to Samsung’s foundry business, but it’s not the end of the world. A lot of investors around the world are saying Samsung may repeat its success in flash memory and DRAM chips in chip fabrication. Give it a few years and we’ll see whether they were right.

zeth006

I think this article sums it up pretty well.

http://www.zdnet.com/blog/btl/apple-puts-chips-on-tsmc-from-samsung-its-just-good-business/45863

daemon

Finally, Samsung Foundry wasn?t even established until 1-2 years ago. TSMC has been in the business far longer.

Your statement makes it seem like Samsung just started making chips last year. Samsung has been making semiconductor chips since 1993. They’ve been making their own ARM based CPU’s since atleast 2003 with the S3C2410 CPU. The new business that they started was chip fabrication for fabless chip designers. Think of it this way: If Intel was making the A4, would you claim that “Intel Foundry” wasn’t even establashed until 1-2 years ago?

Further Samsung is currently producing 20nm chips, while TMSC is stuck at 40nm and will not transition into 20nm until 2013.

Nemo

Peter:  Where Apple’s Tim Cook can diversify away from Samsung, he will.  It only makes business sense to do so.  However, he may not be able to do so, where Samsung, as a supplier of a part, has some unique advantage for Apple.  For such parts, Samsung will keep the business, but even there, Apple will have an alternative supplier for any parts that are essential.

Daemon:  As Tim Cook was recently quoted, Apple believes in owning the core, i.e., fundamental, IP, for its products and services, which it does except for some third party technology that is licensed on FRAND terms to everyone.  For other non-core IP that is others’ property, Apple licenses such technology, if it uses it in its products or services.

daemon

Apple believes in owning the core, i.e., fundamental, IP, for its products and services, which it does except for some third party technology that is licensed on FRAND terms to everyone.

So….. this quote is so twisty and nonsensical.

Look, it’s great that Apple is licensing ARM technology instead of just stealing it and calling it their own. I applaud that, but to act like Apple owns the core architecture of their A4 chip is disingenuous.

zeth006

Apple believes in owning the core, i.e., fundamental, IP, for its products and services, which it does except for some third party technology that is licensed on FRAND terms to everyone.  For other non-core IP that is others? property, Apple licenses such technology, if it uses it in its products or services.

To follow up on daemon said, you’re simply quoting Tim Cook without showing us how that’s relevant to the discussion. You’re not sounding anymore intelligent by doing so.

Nemo

Gentlemen:  You may not know that Apple initially owned a controlling interest in ARM, when ARM was developing its technology, which, I believe, Apple sold several years ago.  Aside from raising much needed capital, Apple probably realized that others would not use ARM, if it remained a company in which Apple had even a significant, much less controlling, interest.  So now Apple, as do many other companies, licenses ARM’s technology.  Only in Apple’s case, it adds its own proprietary design and innovations not found in other ARM-based chips.

As for not stealing technology, it is good when no one does that.  If you have some other point, you should state it clearly, instead of making scurrilous insinuations.

So you both need to check your facts, before shooting off at the mouth.

And other than Steve Jobs, who better than Tim Cook to quote regarding Apple’s policy regarding its core IP?

zeth006

As for not stealing technology, it is good when no one does that.  If you have some other point, you should state it clearly, instead of making scurrilous insinuations

And you should seriously consider taking your own advice. You just spew more info that adds very little to the discussion. It only worsens the impression you give off. Of being kinda douchey. Stop trying so hard. A quote from Tim Cook that has little to do with what we’re discussing holds little water.

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