In a deal likely to be worth billions of dollars Samsung Electronics will be the primary manufacturer of next-generation 14nm FinFET application processors for Apple's iPad and iPhone mobile products, according to a Korea Times report, Monday that referenced unnamed sources.
The report said that the option of Globalfoundries as an alternative source to Samsung for 14nm FinFET foundry manufacturing helped Samsung win an 80 percent share of Apple's forthcoming application processor business and relegate the incumbent supplier, Taiwan Semiconductor Manufacturing Co. Ltd., to second place.
Whether TSMC could hang on to the Apple business – it is thought to be producing the current generation A8 and A8X processors for Apple on its 20nm planar CMOS process at present – has been a topic of speculation in recent weeks. But Apple is well known for keeping suppliers keen on pricing by maintaining multiple suppliers and swapping them in and out (see Apple, TSMC and the Seven Customers of 16FF+).
Samsung has been a long-term supplier of application processors to Apple, but lost out at the 20nm node to TSMC. At the 16/14nm FinFET manufacturing generation Apple design its next-generation A-series application processors – most likely designated A9 – and will outsource about 80 percent the manufacturing to Samsung and remainder will come from TSMC, the report said.
It would be unusual for Apple to send an identical design to two different suppliers as this would involve large costs in duplicated engineering, however it may be that Apple is considering different processors for its smartphones, smart watches and tablet computers.
"Apple has designated Samsung as the primary supplier of its next A-series chips powering iOS devices from 2016 as the alliance with Globalfoundries enabled Samsung to cut off capacity risk," the report quoted an unnamed source as saying.
Production of the next-generation application processors is expected to start early in 2015 at a Samsung wafer fab in Giheung, Gyeonggi province, South Korea and will than expand into Samsung's facility in Austin, Texas and Globalfoundries Fab 8 in New York.
TSMC chairman Morris Chang acknowledged some time ago that it was likely to fall behind in market share of FinFET business initially (see TSMC to Fall Behind Rivals in FinFET Market Share) and may have been aware of Apple's intention to place business with Samsung.
The reason why TSMC will be eclipsed, albeit temporarily in Chang's view, is because it has committed itself to 20nm planar CMOS production while the "major competitor" skipped the 20nm node, Chang said. "We got started a little late because we chose to also do 20nm." That major competitor was taken to be Samsung by observers although Chang did not specifically mention the South Korean company.
TSMC is pushing hard to introduce an improved version of its 16nm FinFET manufacturing process but may have to focus on accelerating the 10nm FinFET node to have a chance of winning back significant Apple business.
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