Samsung Electronics Co. Ltd. has done nicely out of its foundry contracts to supply Apple-designed application processors for several years. The orders have kickstarted Samsung's foundry business but, as has been speculated for a couple of years, Apple wants to, at least, split its risk by putting manufacturing out to another foundry, or possibly more than one.
The speculation that pure-play foundry Taiwan Semiconductor Manufacturing Co. Ltd. (Hsinchu, Taiwan) was about to get an Apple chip order has gone on so long – two or three years – that it has become easy to forget what a big deal the wafer shipments are likely to be.
Market broker Barclays plc reckons over the next two years Apple's orders will grow to be 20 percent of TSMC's sales revenue, according to reports. Given that TSMC had about $20 billion of sales in 2013 and has consistently grown faster than the market that could represent a $4 or $5 billion booster in 2016.
It is true that the power of the iPhone and iPad may be beginning to wane but nonetheless a design choice by Apple can still be the making or breaking of a company. When Cirrus Logic Inc. (Austin, Texas) gained audio chip design wins with Apple it was more or less able to stop trying to sell to anybody else.
Indeed TSMC, through its work for fabless chip companies, like Cirrus Logic, is already making chips that end up with Apple and this is already reported to be worth about 5 percent of sales. But TSMC is also reported now to be ramping the manufacture of chips for Apple; the A8 and A9 application processors and ICs designed for fingerprint sensors and the rumored “iWatch” wearable device.
A market analyst for Credit Suisse has said that TSMC's 2Q14 sales are likely to increase 15 percent compared with the 1Q14 sales. The climb will continue in the second half although such as pattern is the normal seasonal one. Nonetheless wouldn't Globalfoundries Inc. and United Microelectronics Corp. like some of that Apple wind in their sails (and sales).
As pure-play foundry market and technology leader TSMC was the obvious choice to pick up the Apple contract although Globalfoundries Inc. (Milpitas, Calif.) has also been reported to be (see Globalfoundries Gets Slice of Apple Pie) in the mix.
Given that contracts are negotiated several quarters, if not years, in advance and are confidential it is no surprise that the benefits to different parties remain sketchy until the teardowns on each relevant equipment model can be done.
The way the Apple cookie crumbles between TSMC, Samsung, Globalfoundries and others will determine the landscape in chip manufacturing for the next node or two.
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