Apple Reportedly Strikes Deal With TSMC for A6X Production

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Apple TSMC AX Chip Deal

Taiwan Semiconductor Manufacturing Co., better known as TSMC, may soon become Apple’s major supplier of mobile chips for iDevices as the Cupertino company moves to distance itself from longtime legal rival Samsung, according to reports early Wednesday from The Commercial Times, as translated by AFP. TSMC will reportedly begin its relationship with Apple by manufacturing the fourth-generation iPad’s A6X processor in the first quarter of 2013.

Rumors of a future relationship between TSMC, the world’s largest dedicated independent semiconductor foundry, and Apple have persisted since the last quarter of 2012. The move by Apple comes in the wake of a major legal battle with its current chip supplier, Samsung.

Apple, which designs its own mobile device processors but contracts with other companies to build them, has participated in an awkward relationship with the Korean electronics giant for years. The two companies compete heavily in the mobile phone and tablet industries, as well as the courtroom, but cooperate closely on the manufacture of the A-series ARM-based processors that power Apple’s core devices like the iPhone and iPad.

After Apple won a highly contentious patent infringement suit against Samsung in late August 2012, the iDevice maker began to draw back its relationship with the Korean firm, signaling strongly that deals between the two rivals would soon be at an end.

Apple’s interest in TSMC for future chip production is based not only on the company’s independent status but also on the 20nm design process in which it specializes. Future quad-core A-series chips will benefit greatly from a 20nm design that TSMC currently seems uniquely qualified to provide.

Neither Apple nor TSMC have yet responded to the reports.

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What will be interesting to see is how much of their supply chain that Apple can remove from Samsung and how long it will take. In the short term, since Samsung is making a ton of money from their phone division, their copying has been good for the company. In the long term, it will be interesting to see how well they fare.

Samsung has also been the beneficiary of seeing many of Apple’s components that are going into Apple products long before the new products are introduced, thereby giving them a leg up on the competition on knowing what Apple is going to do and where the puck is going to be.  Once a significant part of the Apple’s supply chain is gone from Samsung, it will be interesting to see where Samsung will be in a couple of years without the benefits of seeing what Apple is doing and planning behind the scenes.


Very good points nealg.  I’ve been saying for quite some time that Samsung is really going to be suffering from the loss of Apple’s component sales.  Sad thing is, I know how Corporate America works, and most likely there will be Samsung executives losing jobs for decreased revenue from Apple re-sourcing components to other suppliers, when it is really the fault of the phone/tablet division for blatantly copying Apple.  So, they succeed and get huge bonuses and promotions when the component side sees reduced volumes/revenue.

Oh well - such is life.

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