Analysts: Samsung Wins Apple’s Foundry Business
By Mark LaPedus, SemiMD senior editor
Apple Inc. will exclusively use Samsung Electronics Co. Ltd. as its foundry for the next-generation A6 processor — and not Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) — as previously expected, according to two securities analysts. TSMC officials declined to comment.
The analyst reports, if proven to be true, would indicate a major win for Samsung’s foundry unit, which has built significant fab capacity for Apple but which was in jeopardy of losing that business to rival TSMC.
For some time, Apple has developed its own ARM-based processors for the iPad and iPhone. The devices have been manufactured on a foundry basis by Samsung, including the current A5 processor.
But Apple and Samsung have been on a competitive collision course in the cellular phone and table PC markets. The companies also are embroiled in a bitter legal battle over cell-phone patents.
As a result, there has been much speculation that Apple would switch foundry vendors for the next-generation A6 processor, which is geared for the yet-to-be-announced iPhone5 and iPad3 products. At the 28nm node, Apple was supposedly handing off its A6 foundry business to TSMC, according to reports.
“While there continues to be a lot of speculation regarding Apple’s A6 processor – including the node, chip size, and foundry partner(s) – our checks suggest that the A6 will be produced at 32nm, that the size will be ~90mm², and that the business will continue to go entirely to Samsung rather than shifting some production to TSMC,” said C.J. Muse, an analyst with Barclays Capital, in a report.
“It does appear that GlobalFoundries may support Samsung in the production of the A6 further down the line once the design is transitioned to 28nm,” Muse said.
Ashok Kumar, an analyst with Rodman & Renshaw, also said that he believes Samsung – not TSMC – will make the A6 processor for the 2xnm node on a foundry basis for Apple.
A TSMC spokeswoman said: “Regarding your question on Apple, unfortunately we are not allowed to make any comment.”
At one time, there were also reports that Intel would grab some foundry business at Apple. But for now, “there have not been any meeting of minds” between Apple and Intel on the foundry front, Kumar said in an interview.
For some time, Apple and TSMC were talking about a deal under which TSMC would make the A6 processor on a foundry basis for Apple. Because of the competitive tensions between Apple and Samsung, “Apple would like to de-couple (from its foundry arrangement) with Samsung,” Kumar said.
“Apple had a dedicated team that worked with TSMC,” Kumar said, but the consumer electronics giant encountered some undisclosed “product glitches” with the Taiwan foundry. The foundry’s process was not “stabilized,” Kumar said.
“The TSMC (manufacturing) process has not gelled,” Kumar was quoted as saying in a recent report from the Austin American-Statesman, a newspaper and Web site. “From Apple’s perspective, the risk of going with TSMC is too high. No other foundry can match Samsung’s capacity commitment, process road map and pricing.”
In the interview with SemiMD, Kumar said TSMC could end up being a second foundry source for Apple. But for now, “TSMC has not (won any foundry business) at the 2xnm node at Apple,” he said.
Samsung prevailed at Apple for several reasons. Besides being the incumbent foundry vendor at Apple, Samsung was willing to put aside “significant capacity requirements” for the consumer electronics giant.
“I don’t think that TSMC was willing to put the kind of capacity” aside for Apple that it needed, he said. Samsung also may have offered Apple an attractive “price point” for the foundry business, he said.
Last year, Samsung announced plans to expand the capacity of its 300mm fab in Austin, Texas with a $3.6 billion investment. The fab was largely dedicated to Apple’s capacity requirements.
The expanded fab also produces logic devices for Samsung’s System LSI business. The Austin fab also makes NAND flash memory chips.
On Tuesday (Oct. 4), Apple rolled out the iPhone 4S, an incremental update of the existing iPhone 4. One of the major upgrades of the iPhone 4S is the use of an Apple A5 dual ARM core processor, compared to the A4 used in the iPhone 4, according to IHS iSuppli.
The new iPhone does not include the next-generation 4G technology known as Long Term Evolution (LTE). IHS continues to expect that Apple will introduce an LTE-capable iPhone 5 when an affordable chipset solution allowing a thinner form factor is available. Based on the A6 processor, the iPhone 5 most likely will arrive in late 2012, or in mid-2013, according to the firm.
Rodman & Renshaw’s Kumar said Apple is expected to roll out the iPad3 in the first half of 2012.
Tags: Apple, Intel, Samsung, Semiconductor, TSMC