In a few weeks’ time we’ll be seeing the 2018 iPhone line-up and this years incrementally updated devices will be powered by TSMC made chips; which according to analysts will continue to be the sole supplier of processors for at least two more years. This is due to other foundries failing to meet Apple’s high expectations and quality control standards.
TSMC have been a long term partner of the Cupertino Giant, having invested $9 billion and hiring in excess of 6,000 workers back in 2014 to meet the ridiculous demand from Apple. As a result this year the TSMC factory will use 80% of its capacity for the 7nm chips. Great news for now but mobile phone expert Brandon Ackroyd who works at the comparison site Tiger Mobiles believes such reliance comes with risks.
“Whilst the TSMC and Apple relationship continues to flourish it’s certainly all good for the chip manufacturer but as a result they do have all their eggs in one basket. It only takes once hiccup for Apple to shift production elsewhere with firms like Samsung and Intel waiting in the wings. Whether Apple would want to become so dependent on Samsung is another matter, but I just don’t like it when firms are so reliant on one contract.”
If TSMC can keep Apple sweet by maintaining the quality and meeting demand then it’s hard to see them moving elsewhere as other than Samsung there aren’t many direct rivals currently around for ARM chip manufacturing.
Whilst Samsung are certainly in the market, Apple already has a rather high dependence on the Korean firm who supply OLED screens, NAND and DRAM memory chips. Historically Apple keeps a diverse number of Asian suppliers to offset risk and negotiate price. Should Samsung make the chips too, the iPhone almost becomes a Samsung product.
“As long as TSMC continues to offer something new at leading-edge every year and continues to execute well on yield, I could see Apple remaining sole source on foundry at TSMC for years to come,” Arete Research analyst Brett Simpson said when speaking to the EE Times.
The other firm that springs to mind is Intel who likely have the capability to produce such a chip but they don’t have a proven track record of building and designing ARM-based chips to really give Apple execs the confidence they can delivery. The remaining player is Global Foundries, but they are already very much in bed with Qualcomm’s manufacturing a large amount of their processors.
Here’s a graph of the estimated 7nm chip shipments in 2018.