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Apple's move from Samsung to TSMC for chips might end up badly for Qualcomm and NVIDIA

Posted: , by Daniel P.

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Apple's move from Samsung to TSMC for chips might end up badly for Qualcomm and NVIDIA
Apple's contract with Samsung for mobile chip production of iPhone and iPad silicon ends next year, and given the animosity between the two companies that bag 99% of mobile profits between them, it is not likely to be renewed for the quantities Apple needs annually.

These quantities are expected to hit 200 million chips next year, and only TSMC can provide such capacity, with the CEO Morris Chang indicating that they can dedicate up to two entire plants towards a single customer, a move that might startle NVIDIA, Qualcomm and the rest that use TSMC for their chip fabrication.

The rumor is that TSMC might start supplying the bulk of Apple's future quad-core chips built on the new 20nm process as soon as 2013 in time for the next iPhone. For comparison, current mobile chips are done with 28/32 or 40/45nm, and producing so many chips with the new technology and the yield that Apple demands might literally put the other TSMC clients on the backburner. After all, it will take Q1 of next to fully line up supply and demand for the current 28nm process, which sent Qualcomm's shares down during the summer, and we can imagine the resource shortages if Apple moves in with a new production method.

There were reports that Apple offered a billion to the Taiwanese to secure exclusivity, which the CEO turned down as he didn't want to put all of the company's eggs in one basket, but Apple's cash and persuasive clout is hard to resist, so TSMC might have a resource-allocation puzzle on its hands very soon. For more info how TSMC became the chip giant it is now, you can read our dedicated article on the foundry here.

source: Digitimes

30 Comments
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posted on 28 Nov 2012, 08:47 2

1. wendygarett (unregistered)


If this news is true... Qualcomm and nvidia is in trouble... Because tsmc will gonna make Apple chips instead because Apple offers a higher price... And create shortage for snapdragon and tegra chips

posted on 28 Nov 2012, 08:52

3. Captain_Doug (Posts: 762; Member since: 10 Feb 2012)


Nice sum up.

posted on 28 Nov 2012, 11:11 7

17. Fallout09 (Posts: 419; Member since: 17 Oct 2011)


Apple offering a higher price? Apple is notorious for low balling suppliers and keeps all the cost savings as profit. These exact types of plays that Tim Cook brings to the table.

posted on 28 Nov 2012, 12:33

18. gallitoking (Posts: 4690; Member since: 17 May 2011)


" Apple offered a billion to the Taiwanese to secure exclusivity"
low balling? really you just hate ...

posted on 28 Nov 2012, 12:47 5

19. Commentator (Posts: 2436; Member since: 16 Aug 2011)


A billion isn't all that much to Apple, especially after it made a billion from Samsung, and 15 billion from Sprint. Of course Apple lowballs, that's how you make profit. WalMart is notorious for doing the exact same thing.

posted on 28 Nov 2012, 18:12

23. JeffdaBeat (unregistered)


Commentator, how much did Samsung make off of Apple being their supplier?

posted on 28 Nov 2012, 18:49

25. Commentator (Posts: 2436; Member since: 16 Aug 2011)


I don't know, but probably on the order of tens-of- billions. The point is that companies will always throw in some incentive for exclusivity. A billion is nothing compared to how much TSMC will make over the next few years if they sign a contract with Apple.

posted on 29 Nov 2012, 11:06

30. gwuhua1984 (Posts: 1237; Member since: 06 Mar 2012)


TSMC will have more to lose eventually being locked to Apple. TSMC had already turned down the billion offer before not just from Apple and I believe Qualcomm also, because they want to keep the flexibility and signing the exclusiveness with anybody will cause them to lose that flexibility. Mobile chips are not at it's peak yet, there's way too much growth potential yet to come.

posted on 28 Nov 2012, 17:47 2

22. ph00ny (Posts: 606; Member since: 26 May 2011)


Not quite.
Qualcomm supposedly signed up with Samsung already for some snapdragon socs

As for apple, good luck with next gen products because they're going to need it with tsmc' reputation for yield issues

posted on 28 Nov 2012, 08:48 16

2. joey_sfb (Posts: 3006; Member since: 29 Mar 2012)


Well, Nvidia and Qualcomm's chips can move to samsung plants.. No problem at all. Apple and Samsung can have a happy divorce.

posted on 28 Nov 2012, 08:53 5

4. eisenbricher (Posts: 971; Member since: 09 Aug 2012)


I suspect that Samsung will allow this, because the Qualcomm Snapdragon and Nvidia Tegra are direct competitor platforms to the Exynos lineup.

But again, Apple used to do the same thing. Who knows...

posted on 28 Nov 2012, 08:54 6

5. Captain_Doug (Posts: 762; Member since: 10 Feb 2012)


I'd rather TSMC stay in the game for everyone, not just Apple. They are doing some great stuff and while Samsung is cool, they really are more like Apple than I prefer. I don't want their power or influence spreading. Companies as big as Samsung or Apple can be pretty douchey.

posted on 28 Nov 2012, 09:13 4

7. ryq24 (Posts: 509; Member since: 17 Oct 2011)


but samsung cannot be trusted. they will do to qualcomm and nvidia what they did to apple. they will know which qualcomm and nvidia products are selling well and how much and will come out with their own and let their lawyers do the defending.

posted on 28 Nov 2012, 09:21 1

9. wendygarett (unregistered)


Bad decision, because if they do so, then a lot of apps developer will choose tsmc exclusive, don't forget that most apps developer are pro-apple... They will cut the cost and earn more revenue from Apple

posted on 28 Nov 2012, 10:41 5

13. NexusKoolaid (Posts: 298; Member since: 24 Oct 2011)


This doesn't make a lot of sense. I am a developer, and I target platforms and the chip sets they are built on, not the factories or foundries that make them.

posted on 29 Nov 2012, 01:52 1

29. B3BLW29 (Posts: 237; Member since: 02 Mar 2012)


And yet someone gave a thumb up to that comment. Ignorance is bliss :)

posted on 28 Nov 2012, 08:59 4

6. MeoCao (unregistered)


SS and Qualcomm have good relationship so I can see Qualcomm will use more of SS capacity.

After all capacity rules in chip making, not demand.

posted on 28 Nov 2012, 19:03

26. Hemlocke (unregistered)


Actually, Qualcomm and Samsung have a poor relationship.
http://www.zdnet.com/samsung-sacrificed-qualcomm-truce-for-apple-war-7000001348/

posted on 28 Nov 2012, 09:20 1

8. Bernoulli (Posts: 1451; Member since: 01 Sep 2012)


Oh well, doesn't affect me if I use quad core Exynos chip sets then lol :)

posted on 28 Nov 2012, 09:35 5

10. McLTE (Posts: 711; Member since: 18 Oct 2011)


Nice tunnel vision there buddy!

It may not affect you now.. but it WILL later.

posted on 28 Nov 2012, 10:12

12. joseph98 (Posts: 167; Member since: 03 Feb 2012)


It will effect us all if there is shortages in the market then it will drive prices up.

posted on 28 Nov 2012, 09:39 3

11. clevername (Posts: 1429; Member since: 11 Jul 2008)


People shouldn't forget TSMC has contracts with NVIDIA and Qualcomm to fabricate chips. They can't just stop. They won't spend the massive amounts needed to buy those contracts out because they denied apples billions.

can't wait for celerium chips! ^_~

posted on 28 Nov 2012, 10:44

14. gwuhua1984 (Posts: 1237; Member since: 06 Mar 2012)


I thought TSMC turned down Apple offer because they want to keep their existing customers happy. Is this Apple's re-attempt to get TSMC to produce for them?

posted on 28 Nov 2012, 10:51 2

15. cdgoin (Posts: 369; Member since: 28 Jul 2010)


Its the free market.. if Apple ties them up others will come to the rescue.. it could prove to be BAD for both, as it would untie Samsung and others from having to be nice to Apple at all.. in any shape or form.

posted on 28 Nov 2012, 11:08

16. cnyte (Posts: 28; Member since: 24 Nov 2012)


money is power and do what is best for the business

posted on 28 Nov 2012, 14:43 2

20. ashleyk (Posts: 1; Member since: 28 Nov 2012)


that what happens when you sell your soul to the devil...

posted on 28 Nov 2012, 15:10

21. miladkhahil (Posts: 26; Member since: 08 Dec 2008)


Billion of Dollars .....SAMSUNG LOSS.... And Good for Apple ....
ask yourself, would you want to keep doing business with a company that continuously steals your personal Intellectual property? I know I would not.....

posted on 28 Nov 2012, 18:32 1

24. rusticguy (Posts: 2828; Member since: 11 Aug 2012)


Very True ... Apple is on stealing spree these days now that they are lagging behind by 18-24 mon ths in terms of competing with android ... stealing and running to patent office ... latest was patenting the "flipbook" i think.

posted on 28 Nov 2012, 19:44

27. Friendlysky (Posts: 54; Member since: 04 Jul 2012)


I am trying not to be Racise, but Asian is not for sell in all country! I think apple is over estimate Asian Culture. If TSMC take this deal they might ending up with DOUBLE ZERO by the end of a deal. Because APPLE has being paint with the LAWSUITE on they face around world. I think Samsung make a right decision for not supply to apple any further.

posted on 29 Nov 2012, 01:16

28. mydi.maus (unregistered)


poor samsung:(

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