iPhone 7 Chip Manufacturer Counts Cost of Earthquake Damage

The sole company responsible for manufacturing the processor in Apple's upcoming iPhone 7 and iPhone 7 Plus has reduced its shipping estimates after its facilities were damaged in an earthquake (via DigiTimes).

Taiwan Semiconductor Manufacturing Company (TSMC) suffered the damage to its plants on February 6 when a 6.4-magnitude quake struck the southern part of the country.

Initially, TSMC reported that the damage incurred would reduce the amount of chips it could ship by less than 1 percent. However, this morning the company revised that estimate and said shipment numbers could be affected over the 1 percent mark, but stopped short of giving a specific number.

iphone_7_render_mr
Mockup of iPhone 7 case showing flush rear camera and no antenna bands across rear

Despite the earthquake, TSMC stated it is confident of hitting target revenues of $5.9-6.0 billion in the first quarter of 2016. Whether the damage will affect production of the iPhone 7 chip, which is expected to begin in June, remains unclear.

TSMC reached a deal with Apple only last week to become the sole manufacturer for the iPhone 7's processor, partly thanks to its 10-nanometer manufacturing process. Apple used both Samsung and TSMC to manufacture the chips for the iPhone 6s, perhaps in a bid to lower risks, but the arrangement caused some controversy after benchmarks indicated performance variances between the companies' processors.

The processor in the iPhone 7 and iPhone 7 Plus is likely called the A10. Both devices are expected to debut in September. Leaks of the phones' design suggest that it may have a flush rear camera and a lack of antenna bands on its back. Other rumors indicate that the 7 Plus may feature a dual-lens camera system and that it may be waterproof and not have a headphone jack.

Related Roundup: iPhone 7
Tags: TSMC, A10


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23 weeks ago
This is the risk of using one manufacturer. If something goes wrong to effect supply, cutting Samsung out will not seem like such a smart move.
Rating: 5 Votes
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23 weeks ago

Earthquakes have a thing for delaying iPhones.

I realize you're probably saying that in jest, but it's just that a lot of the manufacturing of the components that go into our tech goodies, takes place near the "Ring of Fire ('https://en.wikipedia.org/wiki/Ring_of_Fire')" where roughly 90% of the world's earthquakes occur, often also accompanied by tsunamis and massive flooding. Remember the massive flooding in Thailand ('http://www.nytimes.com/2011/11/07/business/global/07iht-floods07.html') which caused widespread HDD shortages in 2011-2012?

Those of us who don't live near there can count their blessings, and I for one will gladly suffer some occasional delays to my material indulgences as I watch untold human suffering on the news from the safety of my living room, when another disaster hits those unfortunate people.
Rating: 3 Votes
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23 weeks ago

This 1% estimate was before. Now the estimate is bigger and they aren't saying by how big.

They said it was going to impact them by less than 1%. Later, they said it might be over 1%.

Might be over 1% suggests to me it's probably not a lot more than 1%.
Rating: 2 Votes
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23 weeks ago
So does that mean we are going to have inferior samsung made chips in some of our iphone 7's?
Rating: 1 Votes
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23 weeks ago
What's ironic is that part of Tim Cook's claim to fame, is that as COO he made sure he had multiple sources and used that not only to keep supply flowing, but to play them against each other for price.
Rating: 1 Votes
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23 weeks ago

It's never a good idea to put all your eggs in one basket with a sole supplier, especially as Apple is rapidly heading towards becoming a one product company heavily dependent on a few key suppliers.

Its about time they figured out a way to automated more of the manufacturing process and bring some jobs back to the US.

I haven't looked in a long time but aren't most chip foundries in the same geographic area anyway making them all susceptible to a major event such as this?


All these factors... multiple suppliers, geographic stability/diversity, and US factory... were taken care of when Apple was using Samsung, who had built an extra multi-billion dollar foundry in San Antonio Texas a half decade ago to supply Apple's ARM chips.

Those chips normally account for about 10% of an iPhone's bill of materials.

Moving completely to a Taiwan supplier, while closer to Foxconn China and probably cheaper, is a negative for both Samsung and Texas. And not very smart for Apple apparently, either. It smacks of a bean counter decision, with cost being the most important factor.
Rating: 1 Votes
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23 weeks ago
you know Samsung is going to make some chips for Apple eventually, they always coming calling for some reason...can't live without them :D
Rating: 1 Votes
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23 weeks ago
So Apple's first step towards getting rid of Samsung as an essential supplier backfires immediately, interesting.

They said it was going to impact them by less than 1%. Later, they said it might be over 1%.

Might be over 1% suggests to me it's probably not a lot more than 1%.


Or, it's just carefully worded to smooth over the more serious reality, like how all Apple Support articles regarding widespread hardware issues begin with "We've discovered that a very small number of units are experiencing issues with..."
Rating: 1 Votes
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23 weeks ago

With smart phone growth flattening out this might not have a major impact.


True. It will be interesting to see the volume of 5se's moved. IMO, the "rumored" 30% cut in the 6s is to allow for upcoming tidel wave of demand for the 5se.
Will this effect the 7? It will be interesting to watch. The 7 will need to be very compelling IMO (even though I'll be selling my 6 for one no matter what.) :apple:
Rating: 1 Votes
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23 weeks ago
Let me guess, Samsung created the earthquake so they could get in on part of the deal now?
Rating: 1 Votes
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