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Summary:

Industry sources suggest TSMC is already producing Apple’s chips for the next iPhone. It’s possible that this is just a test run but the timing makes sense as Apple has reportedly been looking to move some of its chip-making business away from Samsung.

Apple iPhone 5s motherboard
photo: iFixit

After months of talk around Apple looking to diversity its list of hardware partners, it appears the talk is turning into action. Taiwan Semiconductor Manufacturing Co (TSMC) is reportedly building new chips for Apple’s next iPhone. AFP reported the news on Wednesday as seen on Geek.com, citing Commercial Times, which doesn’t always have the best track record on its predictions. However, the news would make some sense based on prior reports of Apple seeking another chip-maker to produce its silicon.

iphone 5s

If the report is accurate it could be a financial blow to Samsung. The company isn’t just Apple’s biggest rival in mobile devices; it is also a key hardware partner that builds the chips designed by Apple for its iOS devices. That makes for a strained relationship that can only worsen when the two sue each other over mobile patents and phone designs.

A7

Last July, the Wall Street Journal reported a TSMC win for Apple’s chip business with estimates it could eventually earn 30 percent of Apple’s chip business. Because of the long lead times for components, TSMC wouldn’t likely have ramped up in time for the iPhone 5s and iPhone 5c, which were launched just a few months later. If Apple follows its regular update cycle, however, there’s plenty of time for TMSC chips to in new iPhones this fall. And it’s entirely possible that TSMC is simply creating a sample run in advance of what Apple may need for this year’s new iOS models.

Samsung doesn’t break out its revenues for Apple’s chip manufacturing but a bill of materials teardown from iHS estimates a $19 cost for each A7 processor plus M7 co-process in Apple’s iPhone 5s. With tens of millions of iPhones sold, Samsung’s potential revenue rises quickly when it builds the chips for Apple. Now it appears that money may start flowing to TSMC instead.

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  1. Seven months ahead of the time when new iPhones hit the market?
    I either do not understand something about the manufacturing channels, or this is absurd.

    1. I don’t think it’s at all absurd. I think it’s another sign that Apple leaves nothing to chance.

      Apple always treads very carefully when starting something new. When they were planning the first retail store, they built an entire dummy store just to meticulously analyse how it looked and worked so that it would be a success from day one.

      While I agree that it’s most likely many months before the iPhone 6 is launched, I think that it is entirely plausible that Apple has commissioned a full scale proving run for a limited period to ensure that TSMC can really deliver both the quantity and the quality that Apple requires. If TSMC can’t meet Apple’s targets, then there will still be time to find a alternative foundry.

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