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Summary:

Both Apple and Qualcomm were denied an investment opportunity and exclusive access. But it’s always surprising to hear a company like TSMC, so invested in the mobile device market, rebuff the most cash-rich tech company, and the world’s largest chip buyer.

Apple Event 10/4 - Phil Schiller introduces the A5 chip in the iPhone 4S

Apple is looking to expand its chip suppliers, and turned to Taiwan Semiconductor Manufacturing Co. (TSMC) with a hefty investment offer and request for exclusive access to a product line. According to Bloomberg report Wednesday, TSMC said no. Apple wasn’t alone; Qualcomm went to TSMC as well with a generous offer and was also denied.

According to the report:

Both proposals included investments, each of more than $1 billion, for the world’s largest custom maker of chips to set aside production dedicated to making chips exclusively for them, said the people, who declined to be identified because the details are not public.

Why is Apple shopping around? It could use an alternative to Samsung. Currently iPhone and iPad logic chips are supplied by Samsung; but the relationship between the two competitors and partners is, shall we say, a bit complicated lately. But more important than that is probably Apple landing an exclusive deal so that its chips are always prioritized before any of its competitors. Looking for an alternative doesn’t mean Apple would dump Samsung — Samsung has been very clear it wants to keep Apple’s chip business – but options to ensure its own supply and not being tied to a direct competitor are both good things for Apple to have.

It’s clear TSMC doesn’t want to be beholden to a particular customer or inspire other customers to come asking for exclusive deals. But it’s always surprising to hear a company so deeply invested in the mobile market rebuff the most cash-rich tech company, and also the king of all chip buyers. Apple spends about $28 billion on chips each year, according to IHS iSuppli, and this year is expected to buy almost one of every 10 chips sold in the world.

  1. It really bothers me when statistics are thrown around using totally inaccurate language. Right at the end “[Apple] this year is expected to buy almost one of every 10 chips sold in the world.”

    This struck me as not making any sense. There’s “chips” in everything, ranging from ICs that cost pennies, to ASICs and processors that cost hundreds of dollars. There’s no way that Apple buys 1/10th of the chips sold. So, I read the linked article. What the stats say is that Apple is projected to constitute about 1/10th of the SALES of SEMICONDUCTORS, not actual number of chips. Unless every chip costs the same (which they don’t) and all semiconductors are chips (which they aren’t, but admittedly, by cost, most of them are), you cannot extrapolate that piece of information to mean that Apple will buy 1 in 10 chips.

    Please, try a bit harder to be accurate.

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    1. Anonymous Coward Wednesday, August 29, 2012

      If you’d actually click on the article linked, it cites exactly where they got that statistics from and how they determined it. Though mis-stated (Apple is spending $28 billion on chips in a $300 billion market, ergo 10%), the information right there.

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      1. Did you read what I wrote? It wasn’t the source statistic that was the issue, it was the interpretation. $28 billion in semiconductor purchases out of a total $300 billion market does not equate to Apple purchasing about 1 in 10 ***CHIPS***. If I haven’t made myself clear, here’s another way to put it: the source statistic is in the unit dollars while the interpretation provided in the article is in the unit chips. It’s beyond a misstatement, it’s a complete misinterpretation of the statistic.

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      2. If an automobile market is $100 billion, and a car rental company plans to buy $50 billion worth of cars, the way its been interpreted in this article, it’d mean the car rental is buying 1 out of every 2 cars.

        IF the car rental company is buying the cheapest/costliest of the cars in the market, the number of cars bought relative to the total cars sold in the market will be very different

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      3. If all chips (or in your example cars) cost the same, then you’d be correct, but only in that one instance. Since I can confidently say they don’t (in each case), you’re blatantly wrong.

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  2. Reblogged this on BULLETFAME.

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  3. Exaggeration or digging literal meaning doesn’t hurt but sometimes the author of the article has a way to say things like said above that 1 out of 10 chip buyer is Apple because finally everything goes in terms of dollar (invested).

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