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Print 17 comment(s) - last by TheJian.. on Jul 17 at 5:45 AM

Are the smartphone industry's most famous frienemies bffs again?

Are the world's top two smartphone makers -- Samsung Electronics Comp., Ltd. (KSC:005930) and Apple, Inc. (AAPL) -- returning to a friendlier relationship amid mutually shrinking margins and a smartphone sales chill?  That's what a top Taiwanese newspaper is claiming.

I. Samsung to Hit 14 nm Mass Production in 2015, Make iPhone 7 SoC

After losing a reported 80 percent of its chip business with Apple by 2017 to Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330) (TSMC), there's a report that Samsung Electronics has regained that business.  The Korea Economic Daily reported Monday that Samsung had scored and exclusive contract to manufacture the applications processor (AP) -- the central system-on-a-chip (SoC) -- for the iPhone 7 in 2015.

The report claims Apple and Samsung Electronics signed the exclusive contract on July 14.

More interestingly the new chip will reportedly use 14 nanometer (nm) FinFET transistors.  If the report and other rumors hold true, it indicates that Samsung may have caught up with Intel Corp. (INTC), who is expected to launch another 22 nm refresh in 2014 and push out 14 nm chips in 2015.

Samsung 14 nm wafer
Samsung will reportedly counter Intel with 14 nm SoCs in 2015. [Image Source: Semiaccurate]
 
Samsung and Apple are an intriguing storyline for obvious reasons, but the news that Samsung Electronics is confident it will catch up to Intel in 2015 is arguably the even bigger story here.  That development has to come as a shock to Intel, who as recently as 2011 was talking trash about "far behind" ARM chipmakers like Samsung and TSMC were.

The success at racing towards 14 nm comes thanks to massive investment on Samsung's part.  Samsung spent $11.9B USD on research and development, and $27.1B USD on facilities (including fab) development in 2012 -- one of the biggest budgets in the industry.  Among the big ticket items were a $2B USD new SoC line in South Korea and a $4B USD addition to its Texas SoC chip line.

Samsung is already producing NAND flash storage chips near to the 14 nm node (at the ambiguous 10-19 nm node).

II. Margins, Unit Sales Growth Stall May Force Samsung and Apple to Cooperate

According to Goldman Sachs Group Inc. (GS) 80 percent of Apple's annual $8.8B USD budget for third party chip contracts will go to Samsung in 2013.  Samsung makes much of the storage chips for Apple, plus its A5 and A6 SoCs (and their 'x' variants).  TSMC, meanwhile, stole away the A4 contract business (the chip found in the iPhone 4) from Samsung, prompting some to predict a total phase-out of Samsung's partnership with Apple.
Does the new contract represent an easing of legal tensions?  That remains unknown.  Apple and Samsung have been rumored to be considering a settlement for some time now.  However, the pair remains locked in a battle in a California federal court and in other international jurisdictions, with no settlement yet officially announced.

Samsung Display -- a separate unit -- has tried to distance itself from Apple in the wake of the lawsuits.  Likewise, the semiconductor unit has tried to become "less dependent" on Apple, looking to produce chips for Qualcomm, Inc. (QCOM) and Chinese companies.

Source: The Korea Economic Daily



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Nice spin
By bug77 on 7/15/2013 10:58:18 AM , Rating: 4
The real news here is Samsung catching up to intel. Samsung building stuff for Apple, not so much.




RE: Nice spin
By retrospooty on 7/15/2013 11:05:10 AM , Rating: 5
Saying you will hit "mass production" of 14nm chips and hitting it are 2 completely different things. IT's not an easy thing. TSMC, GF, and UMC have troubles with it every time... Intel seems to have it nailed much better, and that is why they are on 22nm wheil everyone else is on 28nm.

If they do hit it, then good for them, but i wouldnt hold my breath.


RE: Nice spin
By bug77 on 7/15/2013 11:47:08 AM , Rating: 3
I completely agree, but when was the last time someone was so close to closing the gap? I think AMD had such plans in their heyday (they were two years behind, iirc), but unlike AMD, Samsung actually has the clout to follow through.


RE: Nice spin
By retrospooty on 7/15/2013 12:28:12 PM , Rating: 2
I hope so... competition = good for consumers. Always.


RE: Nice spin
By A11 on 7/15/2013 2:12:11 PM , Rating: 2
Yep, if I had a dime for every time a foundry has missed an announced node jump ( usually by years ) I'd be a rich man.


RE: Nice spin
By retrospooty on 7/15/2013 2:19:47 PM , Rating: 2
Yup... "Delayed for 2-3 months due to unexpected yield issues" is a very common phrase in that industry.


RE: Nice spin
By nafhan on 7/16/2013 10:09:09 AM , Rating: 2
Even Intel is having trouble with 14nm (as reported by this illustrious publication):
http://www.dailytech.com/Report+Intel+Delays+14+nm...


RE: Nice spin
By TheJian on 7/17/2013 5:45:15 AM , Rating: 2
http://www.dailytech.com/Report+Intel+Delays+14+nm...

Well considering Intel is spending less, and has now delayed their own stuff nobody should be shocked. I've said they would catch them many times on here/anandtech/toms/seekingalpha.

Samsung's profits now dwarf Intel's/quarter. If I can seemingly outspend you into eternity, you will lose eventually. The only question is how soon? The answer. Pretty soon I'd guess based on investments in fab tech. At worst they will get close enough to make this a 3-6 month lead not 2yrs. That ship sailed long ago when the GANG decided to work together to catch Intel. The gang has far more together to spend on R&D than Intel (samsung does alone actually, no need for IBM, TSMC, etc).

I don't understand the article though. Their deal ends ~2017. This is a 2015 deal that will be done producing easily before that time. TSMC had no way to tool up this fast when Apple just rolled out the dump samsung news not long ago. They made a mistake and didn't have someone else tooled up before doing it. Then again, the real dump doesn't unfold over night, it takes years (2017 to be exact). Why would anyone think the next chip wasn't coming from samsung? The A8, well that's a different story and will likely be made at both TSMC and Samsung; at least until apple finds out if TSMC can get stuff out the door in massive quantities like samsung and most importantly ON TIME so product launches don't end up messed up. This would put A8 from both sides in 2016 and tapering off at samsung 2017 as already predicted.

What part of 2017 does Mick not understand? They won nothing back. It was never lost. It won't be until 2017 according to all reports even this article...LOL. At that point they'll be producing T5 or T6, Denver/Boulder, and NV gpus (gpu's are multiple times larger than socs, so samsung has no worries about pumping out wafers). They may be pumping out AMD crap by then also, Qcom etc. Apple is no loss especially with everyone catching their devices and in some cases bettering them. Hence the sales drop off (check verizon's bill for lack of sales...LOL). Samsung is better off supporting android devices than making the enemy's crap and adding to the 100B+ warchest at apple. NV/Qcom etc are peanuts and can be helped without damaging themselves much (neither sells competing phones, just $25-40 socs). Adding to the apple warchest just buys them better fabs to compete against you shortly (about 2017 roughly...ROFL). Did they buy UMC?

I will be surprised to see silvermont/baytrail in anything in volume at xmas also. Their own roadmaps don't even show production until Nov-Jan time-frame (look at those slides again, it says baytrail shipping holiday, not DEVICES WITH BAYTRAIL for holiday).
http://www.dvhardware.net/article57155.html
http://www.pcper.com/news/Processors/Intel-Launchi...
Even the 2nd one (updated) still is just chips shipping, not products with them inside AFAIK. This is Intel's release schedule, not HP, Asus, Toshiba product schedules. So if you ship Q4, no xmas. Any baytrail product announcements? NOPE. ETA (on the chips) Q4 2013. If they manage to somehow get it into an xmas device it won't be massive quantities.

You have to ship July/Aug to land in xmas stuff/black Friday stuff. I don't see them shipping and have heard nothing about speeding up the table 4-6 months. It takes 4+ months (and only google has done it in 4 with nexus 7) to go from soc at your front door to product using said soc. T4/S800/Octa etc own xmas in tablets. S800 better start rolling soon though, or they may miss most of the boat also. T4 has a good 9-10 or so products coming soon (asus, hp, toshiba, MS all making tablets & HP AIO, shield, Kalos, Acer TA272HUL, ZTE u988s, MadCatz Mojo etc etc) . I haven't seen one S800 announcement yet - rumor of SurfaceRT is it and I don't expect that to sell, tablets aren't used as phones-T4 wifi version will outsell it no doubt at a cheaper price also. Vita didn't need a modem either...LOL. Look at sales. Tablets are generally in home or within wifi range of the internet. You're not going to start watching netflix on LTE...LOL. Not on the puny plans we get in USA for data.

TSMC/GF/UMC all are 2nd rate compared to samsung. Samsung has gotten apple products out the door in massive amounts every single time. Never late. None of the others can say that and TSMC is always late with terrible yields for AMD/NV etc.

But you're right...It's not an easy thing...Which is why Intel delayed :) Even TSMC says they'll ship (small numbers) in 2014 and mass Q1/2015. I won't hold my breath on that one though...LOL.


RE: Nice spin
By testbug00 on 7/15/2013 2:10:16 PM , Rating: 2
No, the real news is this could mean the whole Common Platform (http://www.commonplatform.com/) is going to catch up to Intel.

I honestly doubt they will.

~cheers!


This rumor makes no sense.
By testbug00 on 7/15/2013 12:01:25 PM , Rating: 2
So, first off, we need to remember that Apple hates Samsung.

Secondly, Samsung belongs to a foundry alliance of GloFo, IBM, Samsung, Toshiba and a few others.

That means that if Samsung has 14nm, GloFo would also have it.

Meanwhile, we know that Apple is going for TSMC for 20nm, and according to Charlie (who you can choose to trust or not) Apple is buying a fabrication facility.

All in all, unless Samsung offers Apple a massive deal on 14nm (better than if Apple made it themselves? Provided Charlie is correct, that is.) there is absolutely no reason for Apple to use it.

~cheers!




RE: This rumor makes no sense.
By insurgent on 7/15/2013 8:06:29 PM , Rating: 2
Sure, if these other foundries can match or exceed Samsung's manufacturing capability. Knowing the technology doesn't mean much if you don't have the capability to execute.


RE: This rumor makes no sense.
By testbug00 on 7/15/2013 11:06:50 PM , Rating: 2
note: I realize I misread your reply at first (capacity instead of capability) i have my reply to that after this note, and my original thoughts below with "ORIGINAL" before them XD.

On capability: http://www.commonplatform.com/
That is all that is needed to know... capability to manufacture will depend on how much money APPLE will spend to buy tools, and to tune the process. that is provided Apple bought that fab outright.

If not, it still does not matter, because, capability depends on the research (GloFo option would not be limited bt capacity, see below) which IBM, Samsung, GloFo and others do together...

ORIGINAL: Apple wouldn't need more then a fabs worth of stuff... estimating a 100mm^2 SOC (square) @ 50,000 wafers a months per the fab puts them at 30 million SoC per month. Apple isn't selling anything close to that.

Owning a fab means that you can adjust the process more which allows you to have less defects in silicon (due to leakage and such, not due to general defects).

In addition, GloFo has 2+ fabs in the USA that are specifically made for 20/14/10(?) product. The base production levels for those are 60,000 wafers a month.... so, over 36 million SoC canidates a month (at 100mm^2)

note: Apple's SoC (that we have seen) on 32 is quite small: http://images.anandtech.com/reviews/tablets/apple/...

~cheers!~


RE: This rumor makes no sense.
By Mint on 7/16/2013 5:17:41 PM , Rating: 2
If Samsung thinks that it can replicate everyone else's contribution to the common platform while making breakthroughs on the toughest parts themselves that nobody else can, they're going to leave the collaboration in a second.

It's just too damn valuable to be able to produce twice as many chips (which are faster and/or use less power as well) on the same wafer. Intel only produces their own chips, so really Samsung would have a monopoly in the third party fab business.

They could charge whatever Apple and Qualcomm want to pay to get on the same playing field as Intel, and I suspect that's a lot, i.e. >100% more than they'd pay for 22nm. Apple in particular needs to make sure there aren't any battery life drawbacks in it's high margin products compared to the competition.


Fingers crossed behind backs?
By Mitch101 on 7/15/2013 10:14:39 AM , Rating: 2
Apples fingers crossed behind backs because Ive been seeing a bit about Apple looking into purchasing a semi conductor fab potentially TSCM.

Rumor: Apple Buys Taiwan Fab to Build Its Own Chips
http://www.tomshardware.com/news/TSMC-Samsung-Appl...

One one hand if they do it I commend them on the other hand I can see Intel considering them to be getting into their line of business and need to consider Apple as a competitor if not initially then eventually in ARM processors. Intel would be wise to monitor this space carefully as Apple has changed CPU platforms before.




RE: Fingers crossed behind backs?
By testbug00 on 7/15/2013 11:51:12 AM , Rating: 2
FWIW, buying a fab means a facility, like how TSMC has 10+ fabs.

At least that is my understanding.

But, Apple will not be making anything at Samsung (if they can avoid it) for as long as Samsung is competing with them (massively) in the phone market.

As well, Samsung is part of the alliance that has IBM, GloFo, Samsung, and a few others. So if the get 14nm, others will also have it. Others that Apple probably does not hate as much. :)


By retrospooty on 7/15/2013 10:35:18 AM , Rating: 2
I saw this video of some other smartphone related stuff they are working on... Amazing.

http://www.youtube.com/watch?feature=player_embedd...




By ilt24 on 7/15/2013 12:32:11 PM , Rating: 2
...plus I doubt mass production of 14nm logic in 2015 for Samsung or that Apple will be using Samsung for the A7.




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