“Taiwan Semiconductor Manufacturing Company (TSMC) is likely to score record profits for 2018 as the company will be gradually ramping up volume production of 7nm process in the second half of the year to fulfill lucrative orders from Apple for fabricating A12 application processors for its 2018 new iPhone models and from Quacomm for processing its new-generation smartphone chips, according to industry sources,” Monica Chen and Willis Ke report for Digitimes.
“The sources said that TSMC will see its revenue ratio for advanced 7nm process hit a high of 20% in 2018, and may therefore post better-than-projected revenues and profits for the second half of the year and register an annual revenue growth of over 10%,” Chen and Ke report. “This is despite TSMC having lowered its revenue growth forecast for 2018 to 10% from the earlier projection of 10-15%, citing weaker-than-expected smartphone demand in the second quarter and growing uncertainty facing the cryptocurrency mining market.
Chen and Ke report, “Supply chain sources cited MediaTek’s lackluster performance in capturing orders for its latest AI-based Helio P60 SoCs from China smartphone vendors in the second quarter as another factor driving TSMC to revise downward its revenue growth projections for the year.”
Read more in the full article here.
MacDailyNews Take: As we wrote last week, “The stock market is a knee-jerker’s paradise.”
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Apple has the funds to design the best chips and buy from the best suppliers … every year.
Android is not keeping up and its phone manufacturers are so fragmented that they don’t appear to be able to prepare a focused top level challenge to Apple on chips.
Apple definitely has the funds, but I’m not sure they have the motivation. With as much profits as Apple makes on its iPhones, they could definitely afford to cut into a slightly lower range of smartphone territory just to give the middle-class a taste of iPhone-ery and boost sales. I’m saying this mostly out of ignorance because I’m not sure anything can help Apple sell significantly more iPhones in a totally saturated smartphone market, even in China. I don’t really understand the China situation but it seems lowest cost is the deciding factor.
Anyway, Qualcomm and Samsung are going to push to whatever nano-meter level Apple goes to. Apple definitely won’t be unique in highest chip density no matter how much money Apple has, at least at the flagship smartphone level. The iPhone crushes all mid-tier Android smartphones by a huge factor (but at a higher cost). Wall Street doesn’t praise Apple for having a less fragmented mobile OS. It’s still all about market share percentage and high sales.
I have my doubts about Apple having any motivation when I see how it treats its desktop lineup. I don’t think Apple chooses the BEST Intel processors. Apple chooses good/safe parts but hardly the BEST. Apple certainly never chose the BEST GPUs for any of its computers.
Press size is only one factor. Processor design is more important, and Apple has an advantage in both areas.
As far as cost goes, Samsung’s retail prices for its flagship phones are close to that for Apple’s iPhone 8 and X. The difference is that Samsung ends up having to heavily discount its phones to sell them. The proof? Most of the worldwide profits go to Apple.
Your reasoning appears highly flawed, in my opinion.
Feature size, not ‘press size’
Samsung makes its profits in many ways, including components, not just retail phone sales. How much of the iPhone X goes directly to Sammy? 20%? More?
Apple resellers have been discounting iPhones too, in case you haven’t noticed.
People often talk Apple producing lower cost iPhones. There is certainly an argument to be made if you think that market share is an important metric, but there are also some negative aspects to consider.
At the moment Apple makes iPhones as fast as it possibly can and sells them almost as fast as it can make them. No other manufacturer commits to building a hundred million identical smartphone in a year. If Apple were to sell a lower cost iPhone, it would either have to find additional manufacturing capacity, or to divert some existing capacity to make lower cost iPhones. Apple is trying that former approach in India and is manufacturing low cost iPhones in a dedicated Indian factory which is in addition to it’s others. I’m sure that Apple will be looking very carefully at how that works out.
The other aspect to bear in mind is that analysts attach a great deal of significance to Apple’s profit margins ( or at least when it suits then to do so ) . If Apple were to sell hundreds of millions of cheaper iPhones, the overall profit margin would decrease. It’s a complex judgement to decide whether that’s a good thing or not. On one hand a high ASP is great news and a lower one will be viewed as bad news, but on the other hand, so long as they’re making a decent profit from cheaper iPhones, additional profit is still good news, even if it’s not on the massive scale that is usually associated with Apple.
It’s tough call either way. Apple could certainly make a success of selling cheaper iPhones, but it’s a complex judgement working out if the upside outweighs the downside, especially as many of the downsides relate to perceptions of Apple by third parties and that’s a very volatile and unpredictable area.
In the past, Intel led the cutting edge of semiconductor manufacturing. In recent years, Intel’s progress has slowed while TSMC and others have continued to press forward. The combination of the A-series processor design with TSMC’s leading fabrication capabilities represents a huge advantage for Apple.
Not true. What Intel does, as it always has, is diversify its customer base. A supplier that depends too much on any one company, even Apple, is not wise.
What TSMC calls “7 nm geometry” is probably actually bigger than what Intel calls “10 nm.” TSMC plays name games with their geometry sizes.
Furthermore, when TSMC starts making Apple A-series processors that run at 4.5+ GHz at a true 10nm or less, then you can say TSMC is at the cutting edge. Personally, I don’t see that happening.
Wish they would put some of those funds towards some appropriate updates for the Mac Mini’s, Mac Pros, etc…..