Apple’s processor fab shift from Samsung to TSMC stokes capacity concerns in semiconductor industry

“The semiconductor industry is now more concerned about how Taiwan Semiconductor Manufacture Company (TSMC) is going to distribute its production capacity, and what proportion of revenues and profits it can generate if it receives CPU orders from Apple in 2013,” Cage Chao and Jessie Shen report for DigiTimes.

“It appears more likely that TSMC will start producing chips for Apple’s next iOS devices in 2013, according to industry observers. Samsung Electronics has been the sole supplier of CPUs that power the existing iPhones and iPads,” Chao and Shen report. “Demand from Apple is expected to be huge, said the observers, adding that allocation of TSMC’s available advanced process capacity among its major clients will be a critical decision to be made by the foundry.”

Chao and Shen report, “TSMC chairman and CEO Morris Chang previously hinted that it makes complete sense to dedicate a whole fab, or two whole fabs, to just one customer in order to supply enough chips for their high-volume products… According to IC Insights, Samsung’s IC foundry sales are forecast to rise 54% in 2012 after a 82% jump in 2011. Apple’s orders have been the driving force behind Samsung’s foundry business, said the research firm.”

Read more in the full article here.

MacDailyNews Take: Samsung’s driving force is moving on. You should’ve thought about that before you started up your slavish copiers, Shamelesssdung.

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  1. Anything Apple bought from Samedung should be replaced with something else even if Apple has to invest a little cash into a different company to help it get things right as fast as possible.

    1. They are. All you have to do to see it is look at the increase in capital spending in the financial statements.

      In 2011 they spent $4.6 billion, in 2012 they will spend more than $8 billion. As Apple doesn’t have their own factories, the only significant investments are on the retail side. Anything else is investing in supplier capacity.

  2. Why do so many believe Apple should make a dumb business decision for spite. This blows my mind. If Apple moves some or all processor manufacturing to TSMC, it will be for a good business reason. If not, I need to dump my $4M AAPL now.

    1. Apple has helped Samsung build a very profitable chips business. Samsung has invested heavily in a phone business which is based on copying Apple’s intellectual property. Samsung has been convicted in a court of law for unlawfully violating Apple’s rights with respect to some of this intellectual property. It looks like they will be convicted of additional violations in the future.

      At the same time Samsung is withholding from Apple standards essential patents they have promised to licence to any phone manufacturing firm on FRAND terms.

      You just can’t do business with a company like that. Even if it saves you a few pennies a unit, you just can’t work with people you can’t trust.

  3. Apple is not doing this for spite but for proper business reasons:
    1. It is always important to have multiple suppliers for parts. This is more difficult in the SC industry because the skill set, capacity and technology have to be present.
    2. Samsung are benefiting from Apple’s use of the manufacturing capacity by learning from that to make competing products. Apple are effectively bankrolling their infrastructure cost which make it easier for Samsung to compete. Shifting some of the production away from Samsung will reduce Apple’s reliance on them and make it harder to produce complex components like the SOC.
    Those are good business reasons and provide Apple will more options for component manufacture.

    1. In the world of pure capitalism, making money is the only concern – nothing (and I mean nothing) else matters. Thankfully, that is not the real world and Apple has to consider factors like doing business with less than honorable partners. Samsung makes good products, but they steal Apple’s R&D. Should Apple continue to employ a vendor that copies their hard earned engineering? I don’t think so – even if it means slightly less profit.

    1. I doubt Apple would spend money on chip fab since it only supplies processors to itself. It would be costly and probably take a lot of maintenance to constantly update fab equipment. In other words, not cost effective enough for Apple. I could see it if Apple intended to supply ARM chips to other companies. However, I do like the idea of them being able to build chips for themselves which other companies couldn’t duplicate. Currently, I think Apple has more important things to pursue, such as component production and assembly issues in general. I believe Apple’s cash reserve would be better spent on increasing overall production rates of its devices.

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