Apple and TSMC Sign A Manufacturing Deal

Posted Jun 29, 2013

Apple and Taiwan Semiconductor Manufacturing Co (TSMC) have signed a deal.  TSMC will manufacture chips for Apple’s mobile devices starting in 2014.  A TSMC executive has confirmed the deal, according to the Wall Street Journal.  It took a while for the deal to happen because of glitches that prevented the chips from hitting Apple’s speed and power standards.

Samsung and Apple are major rivals and partners at the same time.  The two are embroiled in lawsuits and counter-lawsuits with each other.  However, Samsung will remain Apple’s primary supplier through the next year for processors and memory chips.

Apple has reduced how much they depend on Samsung though.  The company no longer buys iPhone screens from Samsung and has reduced the number of iPad screens.  Apple still uses Samsung’s microprocessors for their iPods, iPhones, and iPads.

TSMC and Apple have been in discussions as early as 2010.  Apple event wanted to invest in TSMC and to have a factory space dedicated to just Apple chips.  However TSMC Chairman Morris Change rejected both of the requests because they wanted to maintain their independence and flexibility.  TSMC will be mass producing the chips early next year using advanced 20-nanometer technology.  These mean that the chips are smaller and energy-efficient.

Apple is still Samsung’s largest customer for components.  If Apple leaves Samsung, then it would dramatically affect Samsung’s earnings.  Last year, Apple spent around $10 billion for components from Samsung.  This is a large portion of the $59.13 billion that Samsung posted in sales from their component business.