Apple Unsuccessfully Tried to Purchase Exclusive Access to TSMC Chip Production for iOS Devices
Bloomberg reports that Apple and Qualcomm each put forth investment bids topping $1 billion in attempting to secure exclusive access to chip supplies from Taiwan Semiconductor Manufacturing Company (TSMC), but the bids were declined as TSMC has sought to retain flexibility for its production. While Apple's effort has so far been unsuccessful, it does appear to be part of the company's continuing strategy to lessen its dependence on Samsung for components in its mobile devices.
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. Qualcomm needs to boost supply, since shortages are starting to limit earnings.
TSMC has, however, indicated in recent weeks that it would be open to dedicating one or two of its factories to a single customer, but it is unclear if Apple is pursuing that alternative in the absence of a deal for complete exclusivity.
Rumors dating back to March 2011 had pegged Apple as working with TSMC on production of the Ax-series chips that power Apple's iOS devices, but production issues were cited as a primary reason for those plans falling through and Apple remaining with Samsung for the time being.
Samsung has been working hard to compartmentalize its patent and design dispute with Apple in an effort to prevent the fallout from that situation from affecting component supply contracts. But a number of rumors in recent years have pointed to Apple seeking out alternate suppliers for some portion of its component needs as part of a strategic effort to diversify its supply chain away from Samsung and its increasingly competitive position in the mobile device marketplace.
Popular Stories
Phishing attacks taking advantage of Apple's password reset feature have become increasingly common, according to a report from KrebsOnSecurity. Multiple Apple users have been targeted in an attack that bombards them with an endless stream of notifications or multi-factor authentication (MFA) messages in an attempt to cause panic so they'll respond favorably to social engineering. An...
At least some Apple software engineers continue to believe that iOS 18 will be the "biggest" update in the iPhone's history, according to Bloomberg's Mark Gurman. Below, we recap rumored features and changes for the iPhone. "The iOS 18 update is expected to be the most ambitious overhaul of the iPhone's software in its history, according to people working on the upgrade," wrote Gurman, in a r...
Apple will introduce new iPad Pro and iPad Air models in early May, according to Bloomberg's Mark Gurman. Gurman previously suggested the new iPads would come out in March, and then April, but the timeline has been pushed back once again. Subscribe to the MacRumors YouTube channel for more videos. Apple is working on updates to both the iPad Pro and iPad Air models. The iPad Pro models will...
Apple today announced that its 35th annual Worldwide Developers Conference is set to take place from Monday, June 10 to Friday, June 14. As with WWDC events since 2020, WWDC 2024 will be an online event that is open to all developers at no cost. Subscribe to the MacRumors YouTube channel for more videos. WWDC 2024 will include online sessions and labs so that developers can learn about new...
Apple may be planning to add support for "custom routes" in Apple Maps in iOS 18, according to code reviewed by MacRumors. Apple Maps does not currently offer a way to input self-selected routes, with Maps users limited to Apple's pre-selected options, but that may change in iOS 18. Apple has pushed an iOS 18 file to its maps backend labeled "CustomRouteCreation." While not much is revealed...
Apple on late Tuesday released revised versions of iOS 17.4.1 and iPadOS 17.4.1 with an updated build number of 21E237, according to MacRumors contributor Aaron Perris. The updates previously had a build number of 21E236. The revised updates are available for all iPhone and iPad models that are compatible with iOS 17 and iPadOS 17, but they can only be installed via the Finder app on macOS...
With the App Store and app ecosystem undergoing major changes in the European Union, The Wall Street Journal today shared a profile on App Store chief Phil Schiller, who is responsible for the App Store. Though Schiller transitioned from marketing chief to "Apple Fellow" in 2020 to take a step back from Apple and spend more time on personal projects and friends, he is reportedly working...
Top Rated Comments
Not everyone's first language is English. Don't be so sarcastic to posters, it doesn't make you clever, witty, superior or intelligent; indeed it just makes you look like a douche.
if there was one thing that I know..it's that you need to go back to school. ;)
Well, if your main business is chip fabrication, putting all your eggs in one basket is a VERY bad idea, well its a bad idea in any business.
If they sign this contract with Apple, they could miss out on other customers coming offering to pay more for the same capacity, and not be able to take that because of the Apple contract.
Most semiconductor companies today are fabless -- they design and test their chips, but actual manufacturing occurs at TSMC or another fabrication house. The reason is that a semiconductor fabrication plant costs over $1 billion. To make this profitable, the fab needs to run 24/7. You can't compete if you build a fab and only take advantage of 25% of its capacity, because you have to amortize the factory cost. TSMC basically "timeshares" its fabs among many customers, in order to share its manufacturing capacity across many semiconductor design companies (such as Qualcomm, Broadcom, etc).
It costs millions of dollars to design and validate a semiconductor, before even hitting the fab house. Then, very expensive masks have to be made - mask costs can run into millions of dollars for some processes, and it's time-intensive, so you cannot have a mistake in your design. This isn't software, where you can recompile and re-test.
Once the masks are made, sample wafers are made and tested, and minor mask changes are made, if necessary. Here's the important part: Once the masks are validated for production, they are validated only for that plant. Occasionally, a mask can be validated for production at two TSMC plants, but never across two companies, like TSMC and UMC. It simply isn't done.
The problem is that when demand is high, TSMC puts its customers on allocation. Instead of 10 million parts a month, they'll cut you back to 8 or 9 million a month. This has obviously affected Apple and Qualcomm, so much so that they're offering up $1 billion for exclusive fab access. For some reason, TSMC said no. Perhaps the cost of the fab is greater than $1 billion, or they have limited fabs and their total revenue is higher if they simply run them 24/7 across a range of customers. I don't think Apple and Qualcomm are trying to corner the market, they're trying to ensure reliable part supply.
Personally, it may make sense for the US government or a private consortium to form for American semiconductor manufacturing, but it is no easy feat.
I hope this long post was helpful to some of you.