“Apple Inc. and Qualcomm Inc. were rebuffed in separate attempts to invest cash with Taiwan Semiconductor Manufacturing Co. in a bid to secure exclusive access to smartphone chips, people with knowledge of the matter said,” Ian King, Tim Culpan and Adam Satariano report for Bloomberg. “Both proposals included investments, each of more than $1 billion, for the world’s largest custom maker of chips to set aside production dedicated to making chips exclusively for them, said the people, who declined to be identified because the details are not public.”
“The two companies are trying to satisfy booming demand for smartphones, a market estimated by to be worth $219.1 billion, according to data compiled by Bloomberg Industries. Any deal would give Apple an alternate supplier to Samsung Electronics Co., which builds the main chip used in the iPhone and iPad and is also its biggest rival in smartphones,” King, Culpan and Satariano report. “Qualcomm needs to boost supply, since shortages are starting to limit earnings.”
King, Culpan and Satariano report, “TSMC wants to keep the flexibility to switch its production between customers and products. TSMC Chairman Morris Chang told investors last month that he was willing to devote one or even two factories to a single customer… ‘You have to be careful. Once that product migrates, what are going to do with that dedicated fab?’ said Chief Financial Officer Lora Ho said. ‘We would like to keep the flexibility.'”
Read more in the full article here.
MacDailyNews Take: Smart company. Why sell you soul when you don’t need to? Especially to a company whose decision-making abilities have lately been rather questionable.
It’s good to see Cook finally trying to get out of bed with Samsung, but he’s likely quoting movie lines today: “Just when I thought I was out, they pull me back in.”
That’s turning down a lot of dineros. Wow. Well, at least Apple is trying to wean itself from Sammy the copyist. Maybe they should sweeten the deal by offering $2 billion. Put into context, that’s but a drop in the ocean compared to the amount of money paid to secure the Nortel patents which ultimately cost $4.5 billion for a couple of pieces of paper of doubtul enforceability. At least this secures Apple’s ARM chipmaking future which lies at the base of all the brains behind the iDevices.
Ok MDN, I get that you don’t like Browett, I don’t either. But to indict the whole company is a bit over the top, don’t you think? I’m of the opinion that it would be better to start being concerned if missteps occur through the end of the year, not just the move by Tim “allowing” Browett to “try” an experiment. Futzing with the Apple stores is a no no, but I just don’t think Tim is gonna sacrifice the baby over just a point or two of profit margin. The public image the store brings is too valuable.
EIther MDN has new owners or someone new in charge. Things started changing three or four weeks ago, editorially speaking.
When a CEO hires a new fast talking con man, he will never admit he was wrong. Cook will follow Browett to the Gates of Hell. I’ve seen dozens of companies destroyed because of this.
Like America, Mr. Cook, you need to cut your losses and a guy with better ideas a chance.
MDN has ALWAYS called it like they see it.
They obviously see Cook making mistakes and they are continuing to call it like they see it.
MDN has been correct far more than they’ve been wrong. This should give AAPL shareholders and Apple fans pause.
This might be a major priority for Apple — to secure multiple chip fabs and alternate resources for parts. Unless, of course, Apple has other products in line that has completely different parts requirements and all these headaches are temporary.
Meanwhile, if Apple can move away from Samsung, it would make parts etc. costly for Samsung as well. Because Apple places such high orders for memory, custom SoCs and other parts from a handful of suppliers, these suppliers, when they become competitors, namely Samsung, it makes things less expensive for them as well. I don’t know how much separation of the producing factories Apple can demand, but if Samsung can piggyback on bulk orders from outside, it surely must make rides easier.
More so than the lawsuits, Apple can deliver a bag of hurt to frenemies like these by pulling out.
If TSMC deal didn’t work out, Apple may need to invest a sizable chunk of their cash horde for in house chip fab, starting yesterday.
Why not Apple and Qualcomm each invest a billion and start their own chip factory.
Methinks Apple could afford to set up its own fab plants, if others can’t deliver sufficient chips. Hmm, I wonder what the lead time would be? 😆
Apple should just outright buy their own chip manufacturer and do it themselves. If the chips produced fall out of favor, sell the plant or retool for the next version. It’s not like they couldn’t afford to do it.
I’m a bit surprised about MDN comments. They are seeming a bit childish at best at the moment.
Let’s review some facts shall we:
Apple have continued to grow faster than the market for multiple years.
Apple have the best component strategy of all electronic manufacturers and boast the highest margins in the industry.
Apple have the best retail strategy in the world and continue to attract new customers at a rate of 50% since I can remember.
No one can deny that the recent retail changes were errors but were quickly pulled back. We will have to see if Browett learns from this and can make some good moves.
As for component sourcing, it take a very long time to set up new vendors. There is a lot a stake and it is essential to get it right and ensure quality is not compromised. Samsung is the expert in many component areas and has a broad production infrastructure. Apple certainly want to reduce their dependence but there is a lot involved in switching vendors.
So the question for MDN is who do they think will be qualified to replace Cook? This guy knows the company inside and out and is almost as responsible as SJ for the successes Apple have enjoyed in the last 10 years. It was only that long ago that we would have to wait months for new products to ship due to component and production issues. Cook was the one who set up the organization to ensure product was available on release.
Maybe its time to invest in companies in the US and screw the Asian markets. Bring the jobs and investments back home.
OR, build their own.
I don’t see it happening in either US or UK. How about keeping it this hemisphere in either Mexico or Brasil?
Don’t think so, need the jobs here not abroad. I know it may never happen, but US workers need to get the work and investors need to investor their money in the US. Subcontracting some work over the border is OK by me, but keep the bulk here.
All this proves is that in the end you have to do it yourself, Apple fab in the US or Europe, chips, and certain components you simply have to have no matter what.
MDN – I’ve been a reader for the better part of a decade now. Always loved your honest commentary. I’m a bit stunned that you’ve jumped to a conclusion with this recent retail “story”. Given the depth of coverage you’ve given to Apple over the years, you should be able to smell the bullshit light years away.
Does that story honestly sound even remotely plausible to you given what you know about the company and who leads it? Do you think for one second that this management team including Cook would allow for even the slightest degradation in the customer experience?
Apple retail sees more revenue per square feet than any company in the world. The next closest is thousands of dollars below Apple and that’s Tiffany’s. Having been a part of Apple retail since 2005 I can tell you unequivocally that the commitment to great experience has not wavered one bit. Ever. We have never been pushed to drive up sales over giving the customer a delightful interaction and the best solution.
Apple never has been and never will be driven by P&L. Revenue comes as a byproduct of doing right by your products and services. That’s in Apple’s DNA and nobody in that company or on that board would have it any other way.
The only thing that is absolutely known to be a fact here is that the staffing formula changed for some markets and it threw some schedules out of whack. As was pointed out by Apple, this was fixed almost immediately. I’ve personally not seen any impact whatsoever. In fact, our PT people are working tons or hours and have been all summer. The company continues to hire and invest in us and our store. We have even been provided with a cleaning crew at night to make extra sure that the store is clean. Our walls are polished and the floors are machine-scrubbed on a regular basis. Lighting issues are often addressed before any of us even realize there’s something wrong.
We don’t work off commission. Our success isn’t based on upwelling and we’ve been trying to encourage the use of the easypay app for as long as its been out. It’s a value add to the customer experience and it’s been a great help to us.
The timing of that story is suspect and MDN of all people should have picked up on that. It’s total bullshit.
bbjj, agree with almost all of what you are saying, except there IS one person on the management team that would try to degrade the customer experience… Browett.
I’m not against bringing in people from the outside into any corp, but after coming in, being instructed in the way of the new company, and then flat out ignoring it and making wholesale changes that go against everything the new company stands for and was founded on?
We obviously can’t kill the ba$t@rd, but lets run him out and never have him show his face around these parts again.