Taiwan Semiconductor Manufacturing Company or TSMC is set to remain one of Apple's most important suppliers in the years to come, according to a note to investors shared today by reliable Apple analyst Ming-Chi Kuo, who now works for TF International Securities.
TSMC manufactures the A-Series chips that are used in Apple's iPhones. The company has been Apple's sole supplier for iPhone chips for a few years, and will continue to be Apple's only supplier in 2019 and 2020 for the A13 and A14 chips Apple is expected to use in those devices.
According to Kuo, Apple will become increasingly dependent on TSMC in the years to come due to TSMC's "superior design and production capabilities" compared to its competitors and the fact that TSMC, unlike Samsung and other Apple suppliers, does not compete with Apple in other markets.
In the future, Kuo believes TSMC will manufacture Apple-designed ARM-based processors for Mac models starting in 2020 or 2021. Rumors have suggested Apple is planning to transition away from Intel chips to its own custom-made chips starting as early as 2020, which Kuo reiterates in today's report.
There are multiple benefits to custom-designed Mac chips, including no delays because of Intel's manufacturing issues, better profits, more control over design, and differentiation from competitors' products.
We also expect that Mac models will adopt Apple's in-house-designed processor starting 2020 or 2021, which will create four advantages for Apple: (1) Apple could control everything about the Mac's design and production and be rid of negative impacts from Intel's processor shipment schedule changes. (2) Better profits thanks to lower processor cost. (3) Mac market share gain if Apple lowers the price. (4) It could differentiate Mac from peers' products.
Kuo also suggests Apple will recruit TSMC to manufacture chips for its upcoming Apple Car starting in 2023 to 2025.
We believe that Apple Car's Advanced Driver Assistance Systems (ADAS) will support either Level 4 (high automation) or Level 5 (full automation). Only TSMC's 3/5 nm process can meet Level 4 and Level 5 chip requirements.
In an August report, Kuo said that Apple will launch a full Apple Car in 2023 to 2025, reviving rumors about Apple's work on a complete vehicle. Prior to that report, it was believed Apple had shelved plans for a vehicle and was instead focusing solely on autonomous driving software that could perhaps be integrated into partner vehicles.
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