Apple Unsuccessfully Tried to Purchase Exclusive Access to TSMC Chip Production for iOS Devices

MacRumors

macrumors bot
Original poster
Apr 12, 2001
46,732
8,949





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.
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
 

clibinarius

macrumors 6502a
Aug 26, 2010
667
62
NY
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).
 

WatchTheThrone

macrumors regular
Aug 2, 2011
238
134
Uh oh Samsung....Apple wants to drop you!! Time to copy the iPhone to bring in more reven.....wait they already did that ;)
 

chrmjenkins

macrumors 603
Oct 29, 2007
5,322
154
CA
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.

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.
 

Gnomepatrol

macrumors member
Dec 22, 2011
68
0
Metro East Area
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.
 

macs4nw

macrumors 601
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. :)
 

AustinIllini

macrumors demi-goddess
Oct 20, 2011
11,417
8,149
Austin, TX
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.
 

G51989

macrumors 68030
Feb 25, 2012
2,530
10
NYC NY/Pittsburgh PA
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.
 

alphaod

macrumors Core
Feb 9, 2008
22,164
1,209
NYC
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.
 

faroZ06

macrumors 68040
Apr 3, 2009
3,387
1
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.

Bloomberg reports that Apple and Qualcomm each put forth investment bids topping $1 billion in attempting to secure exclusive access to chip supplies...
 

thasan

macrumors 65816
Oct 19, 2007
1,088
1,006
Germany
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 :)
 

fins831

macrumors 6502a
Oct 7, 2011
655
0
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.
 

scoobydoo99

macrumors 6502a
Mar 11, 2003
978
303
so cal


estimated at $219B for what period, by when?? makes no sense without context.

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.
 

Gnomepatrol

macrumors member
Dec 22, 2011
68
0
Metro East Area
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.
 

rudigern

macrumors member
Apr 20, 2010
63
22
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.
 

archurban

macrumors 6502a
Aug 4, 2004
918
0
San Francisco, CA
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?