While it was probably inevitable that Apple would pull away from Samsung as their primary manufacturer for their chips and displays because of the ongoing legal feud between the two companies, the potential ramifications could be more widespread and damaging than we could have guessed. New rumint from DigiTimes seems to confirm previous rumors that Apple is dumping Samsung and shifting to TSMC for their primary chipset production.
Besides the fact that this move would obviously diminish revenue for Samsung, the potential ripple effect could cause massive shortages for other manufacturers as well. Many companies, like Qualcomm and NVIDIA use TSMC as their primary chipset production fab. If Apple switches over to TSMC, it is unlikely the company will be able to keep up with chipset demand from Apple and keep their commitments with the other companies as well. In fact, TSMC may end up dedicating one or two whole fabs to just Apple chip production alone. This move would leave a shortage for a wide variety of other manufacturers. Here's a quote from the DigiTimes article,
In the past, Apple tried to get TSMC to offer them exclusivity with a $1 Billion dollar incentive, but TSMC refused, not wanting to keep all their eggs in one basket. Still, if Apple simply demands massive production from the company, it would behoove them to try and keep up, so Apple could end up simply taking more of the pie than the other manufacturers who use TSMC. While one would like to think that TSMC would keep things as fair and balanced as possible, when it comes to the bottom line, they will likely focus their energies in favor of whomever offers them the greatest volume.It appears more likely that TSMC will start producing chips for Apple's next iOS devices in 2013, according to industry observers. Samsung Electronics has been the sole supplier of CPUs that power the existing iPhones and iPads.
Demand from Apple is expected to be huge, said the observers, adding that allocation of TSMC's available advanced process capacity among its major clients will be a critical decision to be made by the foundry.
TSMC's advanced process offerings serve the world's major fabless IC firms including Altera, Qualcomm and Nvidia. While being capable of providing sufficient capacity to Apple, TSMC also does not want to upset its existing major clients, the observers noted. Allocating efficiently its production capacity will be a focus for the foundry in 2013, the observers believe.
Apple's iPhone and iPad devices collectively demand almost 200 million CPUs every year, the observers estimate. TSMC will need at least more than 200,000 12-inch wafers ready to satisfy the huge demand from Apple, the observers said.
In addition, market observers are paying close attention to how significant Apple's orders will contribute to TSMC's revenues and profitability in 2013.
TSMC chairman and CEO Morris Chang previously hinted that it makes complete sense to dedicate a whole fab, or two whole fabs, to just one customer in order to supply enough chips for their high-volume products.