We believe key reasons in Apple’s (US) last minute decision to recruit TSMC are: (1) unstable yield rate at GlobalFoundries (US); (2) TSMC’s 16nm FinFET Turbo has exceeded Apple’s expectations in yield rate and performance; and (3) concerns of insufficient 14nm supply from Samsung LSI (KR) due to better-than-expected market feedback of Galaxy S6 and S6 Edge, which uses the in-house 14nm FinFET-manufactured application processor Exynos 7420.Kuo notes that GlobalFoundries, Samsung's manufacturing partner, has thus far had an unstable yield rate of 30% for the A9 chip, which is below the 50% yield rate that is required for mass production. Bringing TSMC into the chip-supplying fold calms some of the uncertainties of Apple. Additionally, TSMC's 16-nanometer process has exceeded Apple's expectations.
Alternatively, the Cupertino company is worried that the success of the the Samsung Galaxy S6 and S6 Edge, which use Samsung's advanced 14-nanometer process for their chips, will mean that Apple won't be able to book enough chips from Samsung for the next-generation iPhone. Thus, Apple is turning toward TSMC to complement the supplies from both Samsung and GlobalFoundries.
However, over the past couple of months there has been confusion and conflicting reports over the production of the A9 chip in Apple's next-generation devices. In December, a report indicated that Samsung had begun producing A9 chips. In the same month, another report indicated TSMC would be the main supplier for A9 chips in the next iPhone. Then, in January, Kuo expected TSMC to only provide A9X chips for the next-generation iPad. Finally, earlier this month, another report indicated that Samsung and partner GlobalFoundries would become the supplier for the A9 chip.