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

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

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27 Comments

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

3. Captain_Doug

Posts: 1037; Member since: Feb 10, 2012

Nice sum up.

17. Fallout09

Posts: 421; Member since: Oct 17, 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.

18. gallitoking

Posts: 4721; Member since: May 17, 2011

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

19. Commentator

Posts: 3722; Member since: Aug 16, 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.

23. JeffdaBeat unregistered

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

25. Commentator

Posts: 3722; Member since: Aug 16, 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.

30. gwuhua1984

Posts: 1237; Member since: Mar 06, 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.

22. ph00ny

Posts: 2013; Member since: May 26, 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

2. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

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

4. eisenbricher

Posts: 973; Member since: Aug 09, 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...

5. Captain_Doug

Posts: 1037; Member since: Feb 10, 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.

7. ryq24

Posts: 874; Member since: Oct 17, 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.

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

13. NexusKoolaid

Posts: 493; Member since: Oct 24, 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.

29. B3BLW29

Posts: 238; Member since: Mar 02, 2012

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

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.

26. Hemlocke unregistered

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

11. clevername

Posts: 1436; Member since: Jul 11, 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! ^_~

14. gwuhua1984

Posts: 1237; Member since: Mar 06, 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?

15. cdgoin

Posts: 614; Member since: Jul 28, 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.

16. cnyte

Posts: 28; Member since: Nov 24, 2012

money is power and do what is best for the business

20. ashleyk

Posts: 1; Member since: Nov 28, 2012

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

21. miladkhahil

Posts: 26; Member since: Dec 08, 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.....

24. rusticguy

Posts: 2828; Member since: Aug 11, 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.

27. Friendlysky

Posts: 54; Member since: Jul 04, 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.

28. mydi.maus unregistered

poor samsung:(

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