Print 28 comment(s) - last by maugrimtr.. on Jan 4 at 10:26 AM

Apple looks to eliminate reliance on its bitter smartphone rival

Embroiled in an international patent dispute, Apple, Inc. (AAPL) is looking to drop the "friend" bit from its "frienemy" relationship with Samsung Electronics Comp., Ltd. (KSC:005930).  The world's top two smartphone makers, the American and South Korean electronics firms have seen an increasingly belligerent relationship in the smartphone industry; and yet they still are bound by a close tie. Apple pays Samsung to manufacture the semiconductor chip "brains" of its mobile devices.

But Apple is working hard to dump Samsung.  Reports came on Wednesday that Apple was shifting contracts for its fourth generation iPad's A6X system-on-a-chip (SoC) to Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330).  The news was first reported in the Commercial Times.  The report was later picked up by the AFP and other international outlets.

In 2012 Apple and Samsung are estimated to have done $12B USD in business together.  However, as Apple shifts contracts to other chipmakers like TSMC that number is expected to dwindle.
2013 should still see large payments from Apple to Samsung.  The TSMC production of iPad SoCs won't even hit the trial phase until sometime this quarter, and likely won't reach volume until the middle of the year if all goes well.  And there's no guarantee all will go well; Apple previously looked to shift away from Samsung only to see those efforts reportedly stymied by poor results from TSMC.

Samsung should also be able to soften the blow of any lost business from Apple with its increasing relationship with Qualcomm Inc. (QCOM), maker of the Snapdragon SoC line which sees frequent use in Android and Windows smart phones/tablets.  While Apple is fleeing Samsung due to external factors, Qualcomm appears to be moving away from TSMC directly due to its yield performance.  Of late Samsung has begun to produce Snapdragon S4 chips for Qualcomm, a contract which TSMC was originally expected to exclusively supply.

Some reports have indicated that Samsung may look to punish Apple for its $1.05B USD patent infringement victory against it by raising prices on i-device SoCs.  However, other reports dispute these claims.

Source: AFP [on Asia News Daily]

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Rule number one of the tech wars
By Tony Swash on 1/2/13, Rating: 0
RE: Rule number one of the tech wars
By Andora76 on 1/3/2013 12:33:50 AM , Rating: 1
While others bring irrational emotional "baggage," you at least provide information from reputable sources. The numbers don't lie (unless you were Enron.)

RE: Rule number one of the tech wars
By ritualm on 1/3/2013 2:15:46 AM , Rating: 3
Tony Swash never criticizes Apple. If you believes for a brief second that he tells the truth, you should go to China and have a doctor drill holes in your head.

When the majority of people here disagree with you, are they trolling, or are you?

My bet is on you.

By Cloudie on 1/3/2013 3:35:17 AM , Rating: 2
The vast majority of people on here are as biased as Tony Swash, only in the opposite direction.

RE: Rule number one of the tech wars
By Tony Swash on 1/3/2013 6:15:04 AM , Rating: 1
Tony Swash never criticizes Apple. If you believes for a brief second that he tells the truth, you should go to China and have a doctor drill holes in your head.

When the majority of people here disagree with you, are they trolling, or are you?

My bet is on you.

Not critizing Apple and lying are too different things. Being partisan and lying are two different things. I don't bother to criticise Apple because that base is adequately covered here. I try to be as factual as I can when I post and I am prompted to post by the absurdly flatulent and fallacious nature of many the comments made by the sad Apple haters. I confess it is amusing to watch the spluttering indignation of those whose world view is so brittle that they are deranged and enraged by someone merely having a different opinion and by inconvenient facts. For some anyone offering up an inconvenient fact is a troll. Try not to be so brittle - life will be easier.

RE: Rule number one of the tech wars
By retrospooty on 1/3/2013 12:57:34 PM , Rating: 2
"Not critizing Apple and lying are too different things. Being partisan and lying are two different things."

Putting you up to the legal test... The Truth, the whole truth and nothing but the truth.

The Truth: Yes. Tony generally posts things that are true.
The Whole Truth: No, almost never does Tony post the whole truth. Only the one side, that being the side that makes Apple appear in the best light.
Nothing but the Truth: 50/50 (The truth plus spin)

If it were a court of law, you'd be held in contempt.

By maugrimtr on 1/4/2013 10:26:47 AM , Rating: 2
Tony never tells the whole truth. If you take his version at face value, it makes Apple look brilliant in outspending its competitors like everyone else should be doing the same thing. This utterly ignores the obvious simple truth...

Apple outspending everyone else is not impressive. It only means that Apple is behind everyone else and trying to catch up. Samsung already has manufacturing facilities and chip fabs. Intel already has too many fabs to keep track of. Google doesn't manufacture anything other than data centres (subsidiaries aside).

Only Apple needs to sink $8B into CapEx to pay its suppliers to ramp up equipment, fab lines, manufacturing capacity, and then to ensure their exclusivity for Apple needs. This keeps the cost of capital and utilisation risks with Apple, and the local risks (including staffing and operation) with the supplier.

From that perspective, what else could Apple do? They require exclusive access to fabs and such to keep their production on time and at capacity. Samsung certainly won't give them exclusive access when it has its own burgeoning market to serve. Apple will take the capital hit, the extra risks, and even a very predictable drop in quality to get that exclusivity. THAT agrees with Tony's opening points about Apple's plans but it doesn't mean that Apple are special - just that they are in a tight corner they didn't see coming and need to spend their way out of it quickly.

If there is a Tech War, this is one battle where Apple was caught with its shorts down. Luckily it has the resources to get back to the War more or less intact.

By Ammohunt on 1/2/2013 12:47:31 PM , Rating: 1
As many quality IC's that are produced in Taiwan you would think they could fill Apple's orders with their eyes closed.

RE: Interesting
By ritualm on 1/2/2013 2:15:08 PM , Rating: 5
Not likely. This is TSMC we're talking about.

It had yield problems with both AMD/ATI and nVidia at 40nm. Remember Big Green's pushing for "zero via defects"?

It had problems bringing 32nm into production and ultimately killed that half-node.

If Qualcomm has problems with TSMC-produced SoCs because of yield, imagine what it would be like for Apple. Yes, TSMC can probably fill Cupertino's needs in a few years... but at what cost? Only Samsung can fulfill Apple's exacting needs right now without breaking a sweat quality-wise.

RE: Interesting
By Lord_Conrad on 1/3/2013 5:15:55 AM , Rating: 2
Since no one is mentioning Global Foundries, I assume either they couldn't handle the volume or they are also having yield issues.

Apple should pay more
By mosu on 1/2/2013 12:08:47 PM , Rating: 4
Samsung should make rectangular chips with rounded corners for Apple at a bigger price (1.05 billion $ more). I'm expecting AMD to burn stages and make 14 nm finFET chips at Samsung 's facilities, both processors and GPU.The last one is my Christmas wish!!!

By name99 on 1/2/2013 2:28:13 PM , Rating: 2
Apple previously looked to shift away from Samsung only to see those efforts reportedly stymied by poor results from TSMC.

Did you READ the articles you referenced in this sentence.
(a) They claimed rumors of things that obviously didn't happen. Explain why this rumor is worth more than those rumors.
(b) I saw no evidence whatever of the "poor results from TSMC" you talk about. Rather, the argument seems to be "well, Apple was rumored to go to TSMC, but that didn't happen, so obviously TSMC must have sucked". I do NOT find that a convincing line of argument.

RE: Proof...
By name99 on 1/2/2013 2:35:05 PM , Rating: 2
To add to my point, you also say
While Apple is fleeing Samsung due to external factors, Qualcomm appears to be moving away from TSMC directly due to its yield performance.

and once again this seems an assertion with zero basis in reality. If you follow the chain of articles referenced, the last one, the EETimes article stating that Qualcomm will utilize Samsung, says nothing about TSMC problems or poor yields, it simply says that Qualcomm needs more fab capacity.

You are welcome to hate TSMC as much as you like, based on nothing but the fact that Apple now (maybe --- still not actually established) wants to work with them, but it looks really pathetic for a news organization to constantly go on about how poor TSMC's yields and process are, when the only evidence ever cited for these claims is more articles from the exact same news organization. This is the level of disconnect from reality that we expect from something like the Heritage Foundation, not from a tech reporting news site.

Some more data
By Tony Swash on 1/2/13, Rating: -1
RE: Some more data
By retrospooty on 1/2/13, Rating: 0
RE: Some more data
By MartyLK on 1/2/2013 12:37:48 PM , Rating: 2
You know what we care about? Stuff like this.

Not that I care very much about Chinese designed, engineered and manufactured products, but as long as it gives the industry competition, I'm all for it.

RE: Some more data
By kleinma on 1/2/2013 1:12:42 PM , Rating: 2
I doubt the Chinese did much design and engineering on that. Likely it is just a combination of stolen and lifted parts and features from US and Korean device makers. As for manufacturing, show me the smart phone that isn't made in China.

RE: Some more data
By Andora76 on 1/3/2013 12:36:11 AM , Rating: 2
If you comment on DT, and reply to Tony, apparently you do care. If you truly didn't care, just read the posts and move on.

RE: Some more data
By darkhawk1980 on 1/2/2013 12:45:07 PM , Rating: 5
Hopefully Apple won't find out how abysmal TSMC's yields are until it's way too late. It would be quite humorous to see them go crawling back to Sammy, and they would never do it because they would need to save face. That, in the long run, will be their downfall. I really can't wait to see how this (humorously) plays out.

On that end, Samsung will be fine without Apple. I love how that Asymco data doesn't bother with ANYTHING outside of Samsung specific chips, and Apple specific chips, as even this article and others mention Qualcomm. Either way, your hype, is the same crap as usual.

RE: Some more data
By retrospooty on 1/2/2013 1:02:31 PM , Rating: 2
Apple is very smart with their supply chain. They aren't going to close a door before the next one is open. They will phase it in.

Here is what I say to Apple and Samsung and all of their antics.

RE: Some more data
By ritualm on 1/2/2013 2:18:16 PM , Rating: 2
Apple is a grandmaster at putting the proverb "Cutting the hand that feeds them" in practice.

RE: Some more data
By name99 on 1/2/2013 2:37:36 PM , Rating: 2
Really? Name for us a supplier that Apple screwed over that DIDN'T engage in the sort of behavior that Samsung engaged in?

RE: Some more data
By retrospooty on 1/2/2013 2:49:21 PM , Rating: 2
I am not sure what your point is, but how does "screwed over" come into play?

What he is saying above is that Samsung is a top level supplier and Apple cutting changing the supplier for political not production reasons and it may not work out so well. TSMC has yield issues, especially when starting new products.

RE: Some more data
By name99 on 1/2/2013 5:10:57 PM , Rating: 2
I replied to the statement
Apple is a grandmaster at putting the proverb "Cutting the hand that feeds them" in practice.

This statement implies
(a) that Apple has FREQUENTLY treated suppliers badly and
(b) that it did so without provocation.

Your reply does nothing to validate these claims. Samsung is not the issue here --- Samsung is a sample of one (ie not FREQUENT) and did provoke Apple.

RE: Some more data
By unimatrix725 on 1/3/2013 4:16:43 PM , Rating: 2
Apple has billions in "cash on hand". Why not pay TSMC or Global Foundries for a dedicated line? Do the usual back scratching like our government does. Knowing Apple it is not all that far fetched to buy one of them or even make a chip plant? They need not have a huge fab plant, unless they are so vengeful to fully un seat Samsung?

RE: Some more data
By ritualm on 1/3/2013 5:25:07 PM , Rating: 2
Apple already tried. TSMC said they will not take the money to build an entire chip production line dedicated to everything iCrapple.

Also, running a foundry easily costs many, many billions of dollars just to keep it current and profitable. The magnitude of complexity is far above what Apple's doing with its hardware manufacturing, which is to outsource all hardware manufacturing to Foxconn and others.

RE: Some more data
By Cheesew1z69 on 1/3/2013 7:14:26 PM , Rating: 2
They need not have a huge fab plant, unless they are so vengeful to fully un seat Samsung?
Will and would never happen. Period.

RE: Some more data
By unimatrix725 on 1/4/2013 3:01:07 AM , Rating: 2
Apple bought P.A. Semi and Intrinsity and now tunes/tweaks their own arm based arch, which Samsung makes for them. Samsung wasn't up to snuff in that area. A long time ago they were in the PPC Alliance. More similarities with arm and ppc based chips (RISC). They might as well buy AMD and ARM Holdings to round out their desktop based icrap line too.
That would take care of all mobile and desktop chips including video (If AMD/ATi). The rumors of a real Apple TV also. They would have an excellent fab and possibly take on some new business from others. Talk about massive profits, more than even now!
Granted the costs could make or break them as yes Fabs are expensive all around.
Considering rumors of Apple and Intel having differences. Now the sh*t storm with Samsung. Mind you they got pawned +~20% increase in the new contract on the supply of chips from Sammy. I would guess to cover the loss from the lawsuit if Apple does win.

I would not be surprised if Apple jumps in bed with Micro$oft in such a venture. Considering Micro$oft is practically a troll in the phone arena. They bring in most of there money from "Licensing deals with Android Handset makers". That would be a good way to leverage Nokia into Apples New Fabbed Chips, whatever they may end up being. Apple can still learn a few things from MicroShaft, as bad as I hate to say that.

It is the same old game just new players. Anyone remember back in the day of Micro$oft against Apple. Just swap one name with Google. Then Apple would be a true monopoly.
There is a true advantage to owning the supply chain over commanding/controlling one. If enough effort was put forth perhaps Sammy may one day have to have Apple Fabs print those Exynos chips..... lol
“I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion (Currently 121B 12/03/2012-Google) in the bank, to right this wrong…I’m going to destroy Android…I’m willing to go thermonuclear war on this.”

"My sex life is pretty good" -- Steve Jobs' random musings during the 2010 D8 conference

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