Apple places risky bet on sole iPhone chip provider

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Apple A12 replaces A11 Bionic
TSMC beat out Samsung and Intel to make Apple's A11 Bionic processor, and will apparently be the sole producer of its replacements.
Photo: iFixit

TSMC has produced every iPhone processor for several years, and is reportedly going to continue to be Apple’s sole source for chips.

Apple generally prefers to get components from multiple sources, but apparently no company — not even Samsung or Intel — can compete with TSMC. That makes the two companies very dependent on each other.

iPhone and iPad processors are designed by Apple but manufactured by outside companies. Samsung and TSMC split this job as recently as the A9 chip, but since then it’s been just TSMC.  It’s the only company producing the A12 processor for the 2018 iPhone models, for example.

And the Taiwanese foundry will continue in this role for two years or more, according to EE Times. Two analysts from separate companies predicted that TSMC will be the sole manufacturer of A series chips until 2020 and possibly beyond.

A slightly nervous relationship for Apple and TSMC

This is something of a risk for Apple. It means that any problem at TSMC could spell trouble for the iPhone and iPad. For example, after a virus shut down production at several of its plants early this month, there were questions about whether the release of the next-generation iPhone would be delayed.

And the deal isn’t always easy for TSMC. Apple demands better, faster processors every year without exception. 

No real competition

Apple might hope for alternatives, but there don’t appear to be any viable ones.

“Samsung might have an appetite to build up their foundry relationship with Apple, but their share of Apple’s iPhone BOM [Bill of Materials] is already really high today,” Arete Research analyst Brett Simpson told EE Times. The Korean megacompany supplies OLED displays, DRAM, and storage chips for the iPhone.

Simpson dismisses competition from another well-known ship maker. “Intel lacks history building low-power SoCs that Apple needs at leading edge, so we do not see them as a viable alternative to TSMC.”