Samsung Takes Hit as Apple Partners with TSMC for iPhone, iPad Chips
July 1, 2013 1:11 PM
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Samsung will now fill the void by making chips for the likes of Qualcomm and even for its own products
If Apple and Samsung's turbulent relationship was made into a soap opera, this episode would feature continued
separation between the two
and Apple's "other lover."
Apple recently signed a new supply deal with Taiwan Semiconductor Manufacturing Co. (TSMC) for iPhone and iPad chips. These orders from Apple will reportedly account for 8 percent of TSMC's 2014 total revenue if Apple buys 30 percent of its chips there, according to Credit Suisse analysts.
If Apple bumps this up to 60 percent in 2015, it will make up 15 percent of TSMC's revenue for that year.
Apple has been distancing itself from Samsung due to competition between Apple's iPhone and Samsung's Android-powered smartphones (such as the Galaxy line). The two have also had an ugly patent war that has soured relations over the years.
Apple's new deal with TSMC isn't great news for Samsung, but it will likely fill the void by making chips for the likes of Qualcomm and even for its own products.
[Image Source: Nerd Array]
At the Consumer Electronics Show (CES) back in January, Samsung's President of LSI business Stephen Woo said that it's crucial for the South Korean electronics maker to focus on
alternatives to Apple
when it comes to the chip sector. In fact, Samsung has been supplying Exynos quad-core chips to Chinese smartphone company Meizu and also to Lenovo's K860 LePhone.
According to Goldman Sachs, Apple will purchase about $8.8 billion USD worth of chips from Samsung this year, which is about 80 percent of Apple's allowance for processors, memory chips and screens. But Apple is expected to move 30 percent of its business away from Samsung next year and about 80 percent by 2017.
It's unlikely that Apple will give all of its chips business to TSMC, since it doesn't want to put all of its eggs in one basket. TSMC will begin supplying the processors in early 2014.
Chips aren't the only hardware Apple and Samsung are phasing out in their relationship. Samsung Display, which has provided Apple with
liquid crystal display (LCD) panels
for its iPhones and iPads over the years, officially severed its contract with the iDevice maker last fall. Samsung cited cost as the main issue, since Apple has started using Samsung competitors with better prices for displays. Hence, Apple was expecting bigger discounts from Samsung.
The Wall Street Journal
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TSMC, the downfall of Apple.....
7/2/2013 1:35:29 PM
So what will happen when TSMC's quality is <50% and Apple can't ship smartphones because they can't produce enough SoC's?
Moreover, what happens when Samsung loses most/all of Apple's business there, and replaces it with something else, and Apple comes crawling back?
I'd give Apple the finger, and go about business as usual. Apple wanted to get into TSMC, and should have known that their production is less than adequate in a number of cases.
RE: TSMC, the downfall of Apple.....
7/3/2013 5:39:28 AM
Yes, lets assume a ridiculous worst case scenario for a particular company and believe we're making a good point.
I can do that.
So what will happen to Samsung when TSMC is able to surpass them in terms of quality and volume with Apple's investments, and Samsung is unable to keep up with the latest technology and loses more of its customers to a new, cheaper, more efficient TSMC?
Moreover, how on earth will Samsung replace almost their entire SoC customer base - Apple - who were prepared to pay a premium, given that Samsung and Apple are the only two major players at the moment and that the excess Samsung has comes nowhere near to filling the void which Apple will leave.
What happens when Samsung comes crawling back to Apple asking to be their supplier, since they are no longer able to copy the technology Apple creates and are losing billions a year because Apple moved away.
I'd give Samsung the finger, and go about business as usual. Samsung wanted to copy Apples smartphones, and should have known that Apple wouldn't allow them to forever.
[Clearly all of the above deliberately ridiculous - to match your own comment]
RE: TSMC, the downfall of Apple.....
7/3/2013 10:16:01 AM
I dont agree with his entire post, but TSMC does often have production issues. New chips at TSMC are often delayed for months, and/or come out in far lower quantities than expected due to yield issues, especially when they move to new process nodes. It's no longer TSMC unable to produce 500,000 GPU's on time, its now 5 million SOC's. If I were Apple, or any company relying on TSMC I would be concerned about that. I am sure they are well aware of the possibility and have other plans as well though.
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