TSMC Could Be Apple's New Chip Supplier

By Ashok Bindra July 15, 2011

International multimedia news agency Reuters reported that Taiwan Semiconductor Manufacturing Company (TSMC) has begun trial production of Apple’s next generation chips for mobile devices. It signals a shift from its traditional chip supplier, Samsung Electronics, a source told Reuters.

According to Reuters, Samsung is the sole supplier of the A5 chips used in the iPad 2, but Apple has hinted it is keen to diversify away from the Korean company. The two are battling a legal dispute over patents, and Samsung has also emerged as Apple's toughest competitor in the smartphone and tablet market, wrote Taipei based reporters Clare Jim and Argin Chang.

However, the switch to TSMC is not as simple as it sounds. Because Samsung was part of the A5 design, there may be patent and chip design issues, as per the report. Plus, Samsung continues to push Apple to retain the business.

Fubon Securities analyst William Wang told Reuters that, “Apple is trying to diversify its orders but it will still maintain some kind of relationship with Samsung.” He added, “I think TSMC will get the new chip orders, the issue however is allocation. Apple won't give the whole 100 percent to TSMC. Maybe it'll allocate only 20-30 percent.”

However, as per the report, TSMC looks like a strong candidate for several reasons. Besides planning to spend $7.8 billion this year to update manufacturing technology and add capacity, it also brings the experience of working with the British chip designer ARM Holdings Plc, widely used by Apple to make power-efficient mobile chips.

Seo Won-seok, an analyst at NH Investment and Securities in Seoul told Reuters that, “It won't be easy for Apple to dramatically change its chip provider from Samsung,” 

“It has to redesign the chipset, which Samsung has been deeply involved from the beginning and has some intellectual property. Apple could try various suppliers but they (Samsung and Apple) need each other and the relationship will continue,” noted Won-seok.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2011, taking place Sept. 13-15, 2011, in Austin, Texas. ITEXPO offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. To register, click here.



Ashok Bindra is a veteran writer and editor with more than 25 years of editorial experience covering RF/wireless technologies, semiconductors and power electronics. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

Mitel Going Private, Managed Services Giant with Rackspace on the Horizon?

By: Erik Linask    4/26/2018

Mitel is once again in the news. The 45-year-old communications provider has been on the buying end of multiple transactions in its quest to transform…

Read More

Four Reasons to Reach for the Cloud after World Earth Day

By: Special Guest    4/23/2018

The World Earth Day agenda offers a chance to flip the rationale for cloud adoption and highlight environmental benefits that the technology brings pr…

Read More

Bloomberg BETA: Models Are Key to Machine Intelligence

By: Paula Bernier    4/19/2018

James Cham, partner at seed fund Bloomberg BETA, was at Cisco Collaboration Summit today talking about the importance of models to the future of machi…

Read More

Get Smart About Influencer Attribution in a Blockchain World

By: Maurice Nagle    4/16/2018

The retail value chain is in for a blockchain-enabled overhaul, with smarter relationships, delivering enhanced transparency across an environment of …

Read More

Facebook Flip-Flopping on GDPR

By: Maurice Nagle    4/12/2018

With GDPR on the horizon, Zuckerberg in Congress testifying and Facebook users questioning loyalty, change is coming. What that change will look like,…

Read More