Taiwan Semiconductor Manufacturing Co. (TSMC) has reportedly started shipping its first batch of iPhone and iPad microprocessors to Apple, according to sources familiar with the matter.
By making microprocessors for Apple, TSMC is taking over a role previously carried out by Samsung. Some skeptics had previously suggested that TSMC — which is the world’s biggest contract chipmaker in terms of revenue — wouldn’t be able to deliver the complex chips to Apple’s satisfaction.
That they apparently can is particularly good news for Apple for two reasons. Firstly, securing an additional supplier means that Apple will have more leverage in price negotiations with chipmakers going forwards.
Secondly, it hits business rival Samsung hard at a time when Samsung’s beginning to feel the sting of slowing smartphone sales. While Apple still relies on Samsung for some of its microprocessor requirements, the company has been trying to disentangle itself from Samsung over the past few years, moving much of its manufacturing work to other suppliers. Since TSMC doesn’t compete directly with Apple, it’s likely that it will get increasing orders in future.
“Apple’s order is a big deal to the company,” one source is quoted as saying. “TSMC has assigned a large team to support Apple as you know this client is very picky.”
Analysts claims that Apple’s new microprocessor orders will account for 10% of TSMC’s revenue this year.
Going forward, Apple and TSMC are reportedly collaborating on testing next-generation microprocessors using more advanced 16-nanometer chip manufacturing technology. Should tests go to plan, this would allow Apple to include more powerful and energy-efficient chips in future iOS devices.
Source: Wall Street Journal.