The price of getting Apple’s attention: $12 billion

“Taiwan Semiconductor Manufacturing Co. is locked in an investment duel with Samsung Electronics Co. to meet booming U.S. demand for Apple Inc.’s iPhone and other smartphones, benefiting electronics suppliers around the globe,” Tim Culpan and Ian King report for Bloomberg.

“Taiwan Semiconductor, the world’s biggest custom-chipmaker, plans record spending on plants and equipment this year,” Culpan and King report. “It’s lavishing $12 billion on factories — more than Intel Corp. has ever spent in a year — to counter investments that Samsung is making to win chip orders from Apple, Qualcomm Inc. and its own handset division.”

“Samsung had been the supplier of the most important chip in Apple’s iPhone since its debut in 1997. That changed in the iPhone 6 with Apple’s A8 chips, which are manufactured by Hsinchu, Taiwan-based TSMC,” Culpan and King report. “Now the South Korean chipmaker is trying to leapfrog TSMC in production technology to win the next round… Apple wants to move production of chips for its phones to a so-called 14 nanometer process — tighter circuitry than TSMC’s current 20 nanometers — while other companies won’t need such advanced capabilities so quickly, according to Gartner’s Wang. With manufacturers building leading-edge capacity for so few clients, the result may be a glut of 14-nanometer capacity, leading to ‘fierce price competition,’ he said. That would help boost profit at Apple…”

Much more in the full article here.

8 Comments

  1. I would prefer TSMC to get the A9 primary contract and Apple’s dollars. However we have to be pragmatic and accept that if Samsung are the ones with the best capability then they need to be the primary supplier.
    I think the a percentage of A8 chips are still being made by Samsung and for Apple this is the best approach. It is better for them to have multiple suppliers for key components in case one supplier has production issues.
    So expect both TSMC and Samsung to be making A9 chips (if they can).

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