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Old Aug 29, 2012, 12:02 AM   #1
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Apple Unsuccessfully Tried to Purchase Exclusive Access to TSMC Chip Production for iOS Devices






Bloomberg reports that Apple and Qualcomm each put forth investment bids topping $1 billion in attempting to secure exclusive access to chip supplies from Taiwan Semiconductor Manufacturing Company (TSMC), but the bids were declined as TSMC has sought to retain flexibility for its production. While Apple's effort has so far been unsuccessful, it does appear to be part of the company's continuing strategy to lessen its dependence on Samsung for components in its mobile devices.
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The two companies are trying to satisfy booming demand for smartphones, a market estimated by to be worth $219.1 billion, according to data compiled by Bloomberg Industries. Any deal would give Apple an alternate supplier to Samsung Electronics Co., which builds the main chip used in the iPhone and iPad and is also its biggest rival in smartphones. Qualcomm needs to boost supply, since shortages are starting to limit earnings.
TSMC has, however, indicated in recent weeks that it would be open to dedicating one or two of its factories to a single customer, but it is unclear if Apple is pursuing that alternative in the absence of a deal for complete exclusivity.

Rumors dating back to March 2011 had pegged Apple as working with TSMC on production of the Ax-series chips that power Apple's iOS devices, but production issues were cited as a primary reason for those plans falling through and Apple remaining with Samsung for the time being.

Samsung has been working hard to compartmentalize its patent and design dispute with Apple in an effort to prevent the fallout from that situation from affecting component supply contracts. But a number of rumors in recent years have pointed to Apple seeking out alternate suppliers for some portion of its component needs as part of a strategic effort to diversify its supply chain away from Samsung and its increasingly competitive position in the mobile device marketplace.

Article Link: Apple Unsuccessfully Tried to Purchase Exclusive Access to TSMC Chip Production for iOS Devices
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Old Aug 29, 2012, 12:05 AM   #2
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If Apple's so wanting to move away from Samsung, wouldn't it make business sense to not extend contracts to Apple, driving up the cost of iOS devices while keeping production capacity for the Samsung phones? Wouldn't that mean Samsung gets the money in the end? Wouldn't Apple be aware of this?

I don't think Apple wants to be less reliant on Samsung as much as be able to survive natural disasters-Hello Brazil! Same with Samsung, I think they'd prefer to diversify their production (welcome to Texas).
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Old Aug 29, 2012, 12:07 AM   #3
lazard
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sounds like Apple and Qualcomm tried to lowball TSMC.
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Old Aug 29, 2012, 12:10 AM   #4
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Uh oh Samsung....Apple wants to drop you!! Time to copy the iPhone to bring in more reven.....wait they already did that
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Old Aug 29, 2012, 12:12 AM   #5
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Originally Posted by clibinarius View Post
If Apple's so wanting to move away from Samsung, wouldn't it make business sense to not extend contracts to Apple, driving up the cost of iOS devices while keeping production capacity for the Samsung phones? Wouldn't that mean Samsung gets the money in the end? Wouldn't Apple be aware of this?

I don't think Apple wants to be less reliant on Samsung as much as be able to survive natural disasters-Hello Brazil! Same with Samsung, I think they'd prefer to diversify their production (welcome to Texas).
Apple is pretty much Samsung's only customer besides themselves. Being your own fab isn't easy. Only Intel manages it anymore.

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sounds like Apple and Qualcomm tried to lowball TSMC.
Doesn't matter how much they offered. Putting all your chips in one basket is risky no matter the customer.
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Old Aug 29, 2012, 12:21 AM   #6
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Apple would be stupid to split from samsung. There have been almost no issues with fabrication or production and they put out some beastly chips with high yields.
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Old Aug 29, 2012, 12:24 AM   #7
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Sounds like a fantastic opportunity worth every penny of that Billion $ to gain at least some more independence from outside suppliers. And TSMC certainly has the technical expertise to give APPLE that leg up they could use.
Even a joint partnership with QUALCOMM would be a huge improvement over the status quo.
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Old Aug 29, 2012, 12:24 AM   #8
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Apple would be stupid to split from samsung. There have been almost no issues with fabrication or production and they put out some beastly chips with high yields.
Also the only part of the iPhone made in America. Doesn't really matter but maybe worth pointing out.
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Old Aug 29, 2012, 12:32 AM   #9
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This really isn't surprising they refused, putting all your eggs in one basket, no matter the situation is not a smart business decision.
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Old Aug 29, 2012, 12:33 AM   #10
lazard
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Originally Posted by chrmjenkins View Post

Doesn't matter how much they offered.
everyone has a price
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Old Aug 29, 2012, 12:36 AM   #11
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everyone has a price
Well, if your main business is chip fabrication, putting all your eggs in one basket is a VERY bad idea, well its a bad idea in any business.

If they sign this contract with Apple, they could miss out on other customers coming offering to pay more for the same capacity, and not be able to take that because of the Apple contract.
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Old Aug 29, 2012, 12:38 AM   #12
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Also the only part of the iPhone made in America. Doesn't really matter but maybe worth pointing out.
That is a pretty big deal, imagine the headlines in this current economy. Apple causes massive job loss. Lol
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Old Aug 29, 2012, 12:50 AM   #13
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I think Apple could talk with Intel? Intel has been trying to get into the mobile phone business. This would be a win-win for both.
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Old Aug 29, 2012, 01:13 AM   #14
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If I understand correctly, Apple and others are trying to pay to have their competitors not have access to these chips. That sounds awfully anti-competitive.

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Bloomberg reports that Apple and Qualcomm each put forth investment bids topping $1 billion in attempting to secure exclusive access to chip supplies...
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Old Aug 29, 2012, 01:14 AM   #15
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I think Apple could talk with Intel? Intel has been trying to get into the mobile phone business. This would be a win-win for both.
I don't think intel makes arm processors. Apple will stick to arm for Atleast a few more yrs
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Old Aug 29, 2012, 01:15 AM   #16
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Samsung: stuck on you!

Or

We're getting our billion back!
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Old Aug 29, 2012, 01:16 AM   #17
faroZ06
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Originally Posted by Gnomepatrol View Post
That is a pretty big deal, imagine the headlines in this current economy. Apple causes massive job loss. Lol
I have a "made in the USA" Mac.
There's an online tool that checks for you: http://www.chipmunk.nl/klantenservice/applemodel.html
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Old Aug 29, 2012, 01:20 AM   #18
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Haha the iPhone is "assembled" in China.
Dont you just love that word.
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Old Aug 29, 2012, 01:21 AM   #19
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Apple could choose to cut ties from Samsung and it would be a huge problem because they would paint it as a huge negative.

Competitively they need to cut ties with Samsung, but US business wise, they will get slaughtered because of the job losses from Samsung fabrication plant.
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Old Aug 29, 2012, 01:26 AM   #20
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[url="http://www.bloomberg.com/news/2012-08-29/apple-qualcomm-spurned-in-bids-for-exclusive-tsmc-chip-supply.html"]
estimated at $219B for what period, by when?? makes no sense without context.

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Originally Posted by G51989 View Post
Well, if your main business is chip fabrication, putting all your eggs in one basket is a VERY bad idea, well its a bad idea in any business.

If they sign this contract with Apple, they could miss out on other customers coming offering to pay more for the same capacity, and not be able to take that because of the Apple contract.
You're missing the point. At ten trillion dollars, do you think it would be a "VERY bad idea"?? seriously. He said everyone has a price. Think about it.
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Old Aug 29, 2012, 01:28 AM   #21
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I think Apple could talk with Intel? Intel has been trying to get into the mobile phone business. This would be a win-win for both.
No, intel has no experience in fabricating a mobile chip at that low of a power draw. Two completely different fab types. They would need to divert some heavy focus to that segment. Then maybe years down the road have a tested and consumer ready chip.

I don't think Apple is stupid enough to go with someone untested even if it is Intel.
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Old Aug 29, 2012, 01:33 AM   #22
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Also the only part of the iPhone made in America. Doesn't really matter but maybe worth pointing out.
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Originally Posted by Gnomepatrol View Post
That is a pretty big deal, imagine the headlines in this current economy. Apple causes massive job loss. Lol
The glass is manufactured in Kentucky.

Tim Cook at D10.
24:20 http://www.youtube.com/watch?v=eUAPHgiEniQ
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Old Aug 29, 2012, 01:35 AM   #23
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The glass is manufactured in Kentucky.
as well as Japan and Taiwan.
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Old Aug 29, 2012, 01:36 AM   #24
rudigern
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Anyone else find it funny that Apple are bidding for a company so they can move away from Samsung with the same amount as Samsung has to pay Apple? It's like Samsung are paying Apple to take their business elsewhere.
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Old Aug 29, 2012, 01:38 AM   #25
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now we all know that Apple has tried to monopolize IT industry which is totally illegal in the US. but they do now with stupid patent lawsuit. stop doing. it makes you being stuck into the hell, and will never get out of a hole. if you really concern about manufacture, why don't you make your own since apple has been the biggest valuable company in the world with so much cash? do it now. don't be depending on any company or subcontract anymore. well, you can't. you can't live along especially in business market. cooperation is only way to survive. don't you know?
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