TSMC May Win Bulk of A9 Orders Due to Better Production Yield

[MacRumors]

News reports and rumors have gone back and forth multiple times over whether Samsung or the Taiwan Semiconductor Manufacturing Company (TSMC) will produce the A9 chips designed for use in next-generation iOS devices as the two companies compete for Apple's business.

In December, a report suggested Samsung had already begun production on the A9 chips, but a new analyst prediction shared by the Taipei Times suggests that TSMC, not Samsung, may be Apple's main A9 chip supplier due to its more favorable production yield.

"The two companies' technological capabilities are similar, so the key factor will be whose mass-production yield is better," MIC director Chris Hung (???) told reporters on the sidelines of the event. Hung added that the chances of TSMC remaining the main supplier are higher because of its better yields.

While one company will win the right to produce the bulk of Apple's next-generation chips, Apple may spread orders of the A9 processor across multiple suppliers in order to cut down on risk. The best yield results in the lowest price for Apple, so the company that manages to produce the most usable chips from a single wafer (a semiconductor material) will likely win the bulk of orders from Apple.

The continually shifting Samsung vs. TSMC rumors reflect the ongoing competition between the two chip manufacturing companies and demonstrate just how important Apple contracts are to suppliers. As we saw with GT Advanced and its failed sapphire deal with the Cupertino company, manufacturers will go to great lengths to secure lucrative partnerships with Apple.

In 2013, Apple signed a multi-year deal with TSMC to produce A-series processors for Apple devices as the company made an effort to move away from Samsung, but while TSMC produced the bulk of Apple's A8 and A8X chips for the iPhone 6 and the iPad Air 2, Apple has not been able to entirely cut ties with Samsung due to its chip production expertise and reliability.

As chip technology advances, it becomes more and more difficult for companies like Samsung, TSMC, Intel, and others to pack transistors onto an ever-decreasing surface area, which is why Apple has likely made moves to diversify its supply chain lineup in recent years. More suppliers gives the company a backup solution should one run into production difficulties that could result in potential delays.

Article Link: TSMC May Win Bulk of A9 Orders Due to Better Production Yield

 

[androidlag]

hey what do you know, samsung has poor product quality!

 

[stewy]

hey what do you know, samsung has poor product quality!

http://appleinsider.com/articles/14...wsuit-over-2011-macbook-pro-graphics-failures

 

[demodave]

https://www.macrumors.com/2014/12/30/tsmc-chip-production-yield/


News reports and rumors have gone back and forth multiple times over whether Samsung or the Taiwan Semiconductor Manufacturing Company (TSMC) will produce the A9 chips designed for use in next-generation iOS devices as the two companies compete for Apple's business.

[snip]

As chip technology advances, it becomes more and more difficult for companies like Samsung, TSMC, Intel, and others to pack transistors onto an ever-decreasing surface area, which is why Apple has likely made moves to diversify its supply chain lineup in recent years. More suppliers gives the company a backup solution should one run into production difficulties that could result in potential delays.

Article Link: TSMC May Win Bulk of A9 Orders Due to Better Production Yield

The principle reason for having multiple suppliers is business, not technology. Although there is a minimum requirement of capability (and quality, which does indeed reduce cost as a function of yield), the principle concern is pricing. Higher yield reduces the manufacturing cost per chip, but it does not necessarily reduce the price. We can see that in Apple's phenomenal margins. The "price" is much higher than the *cost*. If margins are tightly controlled (as I suspect is the case in any negotiation with Apple), then cost does dictate price, but even Samsung or TSMC has to make some form of margin/profit.

The benefit to Apple in having more than one supplier is that Apple can play the suppliers off against oneanother to decrease the cost of the chips to Apple. "We shall not be undersold."

 

[Robert.Walter]

Not sure why you portray the GTA sapphire contract as "unfavorable".

If GTA hadn't oversold its ability and delivered on the goods, the deal would have been anything but unfavorable.

 

[currentinterest]

Sounds like a good strategy to me. It also likely gets them to compete on price as well.

 

[gnasher729]

http://appleinsider.com/articles/14...wsuit-over-2011-macbook-pro-graphics-failures

Well, after that debacle with AMD graphics cards, Apple surely doesn't want to get sued when Samsung processor stop failing. I assume that's what you wanted to tell us, right?

 

[stewy]

Well, after that debacle with AMD graphics cards, Apple surely doesn't want to get sued when Samsung processor stop failing. I assume that's what you wanted to tell us, right?

I'd say they're more likely to get sued when they start failing.

 

[JAT]

See now, if Samsung phones were favoring TSMC, that would be more interesting.

 

[Four oF NINE]

Will this be a more convenient outcome? Which would be superior?

 

[Noble Actual]

Hope this isn't true.

TSMC has had a BAD history of delivering.

Wasn't A8 suppose to be bulk TSMC? They failed and Samsung had to take over.

Apple has wanted to stop using Samsung to make its parts but the truth is...they make the BETTER parts

Samsung > TSMC over chips.
Samsung > LG over displays.

 

[Morris]

All these analysts claiming the production run is split between two companies… I have yet to see the first person with actual chip production experience state that it’s even possible.

So far I only see experts claiming that it’s technically almost impossible to split advanced production runs because different companies have different requirements. You can’t send the same tape-out to both companies because tape-outs for TSMC wouldn’t be compatible with Samsung’s equipment and vice-versa.

Instead of printing speculation from “analysts” could MacRumors instead try to speak to a subject expert to get real insight? You know, someone who actually knows a thing or two about chip design and production?

 

[Mascots]

All these analysts claiming the production run is split between two companies… I have yet to see the first person with actual chip production experience state that it’s even possible.

So far I only see experts claiming that it’s technically almost impossible to split advanced production runs because different companies have different requirements. You can’t send the same tape-out to both companies because tape-outs for TSMC wouldn’t be compatible with Samsung’s equipment and vice-versa.

Instead of printing speculation from “analysts” could MacRumors instead try to speak to a subject expert to get real insight? You know, someone who actually knows a thing or two about chip design and production?

I don't think I follow... Why would these companies need different tape-outs and if that is the case, why couldn't Apple supply multiple tape-outs for the manufactures? Could you explain a little?

 

[chrmjenkins]

The last official reports had TSMC's FinFET schedule well behind Samsung. I doubt much has drastically changed in the last few months.

Their processes are also not compatible, so it's not simply flipping a switch to decide between the two.

 

[Keniutek]

I would rather see Samsung as the main supplier. We all say "bad things" about the Korean company, bla bla bla...
and then pray to get their screen or hd. LOL

 

[holydude]

And this info comes from Taiwan. Sounds legit to me.

 

[bergert]

way back in the 80s and 90s

this was a standard practice called "2nd sourcing"; but then the accountants came in and saw an opportunity to cut costs to boost stock value = fat bonuses for the managers.

For all mass-produced wares (CRT TV's or VCR's) it was required to only use parts (capacitors for example) which were produced by at least 2 suppliers. Because stopping the production run was a loss calculated in tens of thousands per minute (idle facility and idle workers).

 

[inscrewtable]

Excellent that's exactly what we want to see, we want to see Samsung screwed but we want it to be business and not personal. Copy that.

 

[Morris]

I don't think I follow... Why would these companies need different tape-outs and if that is the case, why couldn't Apple supply multiple tape-outs for the manufactures? Could you explain a little?

The difference between CPUs and other parts is that most things Apple buys from third parties are off-the-shelf products. As long as they meet a certain spec Apple can buy them and integrate them. However, the CPU is one of the few more complex things Apple actually fully designs in-house.

Now, I am not a chip manufacturing expert, that’s why I’m asking this question. What I hear from people who actually do this sort of stuff for a living is that you can’t just send the same tape-out to both. A tape-out needs to be created specifically with the foundry’s requirements in mind. Obviously you could create two different designs for two different manufacturers but the overhead and engineering headache for Apple would be substantial and possibly not worth it for only 20% of the production run.

I’d like MacRumors to actually do some digging and speak with people who commission big CPU production runs to see how feasible all this speculation actually is. If MacRumors can reveal that all this talk by business analysts is utter nonsense it could be a good story.

 

[Aluminum213]

Sounds like a good strategy to me. It also likely gets them to compete on price as well.

Don't worry, the savings won't be passed upon to you

 

[gnasher729]

Hope this isn't true.

TSMC has had a BAD history of delivering.

Wasn't A8 suppose to be bulk TSMC? They failed and Samsung had to take over.

Apple has wanted to stop using Samsung to make its parts but the truth is...they make the BETTER parts

Samsung > TSMC over chips.
Samsung > LG over displays.

In view of the article this seems wilful ignorance.

 

[TMay]

The difference between CPUs and other parts is that most things Apple buys from third parties are off-the-shelf products. As long as they meet a certain spec Apple can buy them and integrate them. However, the CPU is one of the few more complex things Apple actually fully designs in-house.

Now, I am not a chip manufacturing expert, that’s why I’m asking this question. What I hear from people who actually do this sort of stuff for a living is that you can’t just send the same tape-out to both. A tape-out needs to be created specifically with the foundry’s requirements in mind. Obviously you could create two different designs for two different manufacturers but the overhead and engineering headache for Apple would be substantial and possibly not worth it for only 20% of the production run.

I’d like MacRumors to actually do some digging and speak with people who commission big CPU production runs to see how feasible all this speculation actually is. If MacRumors can reveal that all this talk by business analysts is utter nonsense it could be a good story.

There's a side benefit to having two or more sources; you get to block some other entity from using that same production. Right now, it looks like Qualcomm and Apple are absorbing the bulk of the next node production, albeit Samsung might have some Exynos production as well. Not a good thing for Nvidia or AMD, but especially bad for the K1 SOC.

 

[wizard]

The benefit to Apple is the ability to reduce risk. It is the old adage about putting all of your eggs in one basket. Frankly considering Apples volumes I'm surprised that they haven't gone to dual suppliers years ago. If not dual suppliers at least demand geographically separated manufacturing sites.

The principle reason for having multiple suppliers is business, not technology. Although there is a minimum requirement of capability (and quality, which does indeed reduce cost as a function of yield), the principle concern is pricing. Higher yield reduces the manufacturing cost per chip, but it does not necessarily reduce the price. We can see that in Apple's phenomenal margins. The "price" is much higher than the *cost*. If margins are tightly controlled (as I suspect is the case in any negotiation with Apple), then cost does dictate price, but even Samsung or TSMC has to make some form of margin/profit.

The benefit to Apple in having more than one supplier is that Apple can play the suppliers off against oneanother to decrease the cost of the chips to Apple. "We shall not be undersold."

 

[firewood]

So far I only see experts claiming that it’s technically almost impossible to split advanced production runs because different companies have different requirements. You can’t send the same tape-out to both companies because tape-outs for TSMC wouldn’t be compatible with Samsung’s equipment and vice-versa.

True. But Apple likely now has enough engineering staff and resources to tweak layouts, DRC, and tape-out two (or more!) mask sets for each flagship processor design. Your "experts" are probably talking about smaller companies that can barely (if at all) afford one mask set at anywhere near those geometries.

 

[bushman4]

So many rumors and there's no substantial backing to any of them. Does anyone really care which company is actually going to manufacture the A9 chip. No