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Rumor: Apple Buys Taiwan Fab to Build Its Own Chips

By - Source: SemiAutomatic | B 19 comments

If the rumor is true, Apple may produce its own A10 chip in a few years.

Despite all that talk that Apple is striking a deal with Taiwan Semiconductor Manufacturing Company Limited (TSMC) to produce the A8 chips and later, there's now a rumor that the fruity iPhone maker will make its own chips, thus entering the fab industry thanks to a purchase of an unnamed chip fabricator. There's speculation that Taiwan-based chipmaker United Microelectronics Corporation (UMC) was Apple's purchase of choice.

For years Samsung has been the sole builder of SoCs for Apple's line of devices including the iPhone, iPad, iPod Touch and Apple TV. But as bitterness continues to build between the two companies in their patent war spread out across the globe, and the rising competition between the two in the smartphone and tablet sectors, reports have surfaced that Apple is looking to be less reliant on Samsung and use another fab to produce its chips.

In June, unnamed sources claimed that TSMC and its IC design service partner Global UniChip secured a three-year agreement with Apple to supply foundry services for the next A-Series chips using 20 nm, 16 nm and 10 nm process nodes. Sources said TSMC began producing Apple's A8 chip in small volumes in June, and will ramp up its 20 nm production capacity after December 2013. TSMC is expected to install a batch of new 20 nm fab equipment -- capable of processing 50,000 wafers -- in 1Q14.

Hints of TSMC's involvement with A-Series manufacturing surfaced back in January, indicating that Apple was sampling TSMC as a foundry with a trial production of its A6X SoC. Then in April, The Korea Times said that Samsung will not be a part of the A7 chip either. One of Samsung’s local partners in Korea told the paper that Apple was sharing confidential A7 info with TSMC.

TSMC is expected to produce Apple's A9 and A9X starting around the end of 3Q14. These will be used in next-gen iPhone and iPad products for 2015 whereas the A8 will be used for an iPhone slated to launch in early 2014.

That said, Apple's foundry purchase makes sense. Not only will the fruity company not need to solely rely on other sources to produce its chips, but offer foundry services to other companies, making a little extra cash on the side. An iOS-dedicated chip manufactured by Apple may not begin until A10 as it is given the supposed deal with TSMC, and if the roadmap generated by previous reports hold true, the A10 won't see the light of day until 2016. That's speculation, of course.

Although United Microelectronics Corporation trades on the New York Stock Exchange, it's based out of Taiwan, so any hopes that Apple will provide Americans with new jobs in a fab facility is out the door. The company was founded in 1980 as a spin-off of Taiwan's government-sponsored Industrial Technology Research Institute. It's reportedly second only to TSMC, and has ten manufacturing facilities spread out across Taiwan, Singapore and China.

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Top Comments
  • 11 Hide
    stevejnb , July 13, 2013 1:13 PM
    Sir, I've bashed Apple a lot because I think they're a company that releases vastly overpriced products, but... The reality is, producing a major product line in the US is likely a quick ticket to a small profit margin or a failed product.

    We all know that the cost of labor in the US would either drive up the cost of the product significantly, making labor one of the most expensive factors in production, or cut the profit margin to ribbons. What they would be banking on is that Americans would see the higher price and buy because of a "Made in the USA" sticker with a *much* cheaper Samsung or other branded phone staring them in the face right next to them. It's true that a number would, but, you mentioned "stingy, greedy mofos" about the corporations, and you give the common American *far* too much credit. They are every bit as stingy and greedy, and if you don't believe it, just look at the success of vendors who market things almost exclusively made by cheap foreign labour. Made in the USA goods were always there, but people gladly bought Walmart crap to save a few bucks and watched local vendors selling American goods go down in flames. Now those made in the USA goods are gone and people are pretending like it's all the evil corporations' fault for giving the consumer what the consumer voted for with their wallets.

    The reality is, the patriotism market is saturated, and it was never that big to begin with. When people vote with their wallets, they would rather wave around an extra few dollar bills they saved than an American flag. These corporations are greedy, yes, but they aren't stupid - and they know what you either don't know or aren't admitting - that the common American will gladly buy Chinese when no-one is looking, even if they wave a flag when someone is, and they are every bit as greedy as the corporations.

    You pair all this with the fact that there are a half dozen companies lying in wait for the big dogs to do something as stupid as expecting patriotism to sell products in the face of better prices and Apple knows that the epic blunder of large scale American production is one they can't afford if they want to stay in the top spot.

    Besides, those sweatshop workers work a heck of a lot harder than Americans while expecting far fewer benefits. Frankly, the modern western world worker is an entitled brat, and you don't pull a profit trying to sell goods made by people who expect the world given to them on a platter made by people who expect the world given to them on a platter.
Other Comments
  • 5 Hide
    acadia11 , July 13, 2013 9:20 AM
    Well they have the cash to pull this off.
  • 4 Hide
    m32 , July 13, 2013 11:23 AM
    Honestly, I saw them doing this years ago. I'm surprised it took this long.
  • 1 Hide
    TheN00bBuilder , July 13, 2013 11:32 AM
    I can't wait for Apple PC Processors. Socket name ideas;
    Granny Smith
    Yellow
    Red
    Gaia
    ...Get it????
  • 4 Hide
    back_by_demand , July 13, 2013 11:47 AM
    Yeah, if Apple start making PC processors, expect them to announce them an magical and innovative - followed by a massive lawsuit against Intel when they find a way to patent the concept of a 'CPU'
  • 3 Hide
    guru_urug , July 13, 2013 12:58 PM
    Quote:
    Yeah, if Apple start making PC processors, expect them to announce them an magical and innovative - followed by a massive lawsuit against Intel when they find a way to patent the concept of a 'CPU'


    And expect to pay more for the white one :D 
  • 11 Hide
    stevejnb , July 13, 2013 1:13 PM
    Sir, I've bashed Apple a lot because I think they're a company that releases vastly overpriced products, but... The reality is, producing a major product line in the US is likely a quick ticket to a small profit margin or a failed product.

    We all know that the cost of labor in the US would either drive up the cost of the product significantly, making labor one of the most expensive factors in production, or cut the profit margin to ribbons. What they would be banking on is that Americans would see the higher price and buy because of a "Made in the USA" sticker with a *much* cheaper Samsung or other branded phone staring them in the face right next to them. It's true that a number would, but, you mentioned "stingy, greedy mofos" about the corporations, and you give the common American *far* too much credit. They are every bit as stingy and greedy, and if you don't believe it, just look at the success of vendors who market things almost exclusively made by cheap foreign labour. Made in the USA goods were always there, but people gladly bought Walmart crap to save a few bucks and watched local vendors selling American goods go down in flames. Now those made in the USA goods are gone and people are pretending like it's all the evil corporations' fault for giving the consumer what the consumer voted for with their wallets.

    The reality is, the patriotism market is saturated, and it was never that big to begin with. When people vote with their wallets, they would rather wave around an extra few dollar bills they saved than an American flag. These corporations are greedy, yes, but they aren't stupid - and they know what you either don't know or aren't admitting - that the common American will gladly buy Chinese when no-one is looking, even if they wave a flag when someone is, and they are every bit as greedy as the corporations.

    You pair all this with the fact that there are a half dozen companies lying in wait for the big dogs to do something as stupid as expecting patriotism to sell products in the face of better prices and Apple knows that the epic blunder of large scale American production is one they can't afford if they want to stay in the top spot.

    Besides, those sweatshop workers work a heck of a lot harder than Americans while expecting far fewer benefits. Frankly, the modern western world worker is an entitled brat, and you don't pull a profit trying to sell goods made by people who expect the world given to them on a platter made by people who expect the world given to them on a platter.
  • 0 Hide
    macpeteo , July 13, 2013 1:16 PM
    Why would they sign a three year contract with another foundry if they planned on buying UMC?! Could of have been just a one year contract or they could have signed with UMC to begin with.
  • -1 Hide
    halcyon , July 13, 2013 2:17 PM
    Stevejnb, nicely put. Nicely put. Thanks for taking the time.
  • 1 Hide
    hannibal , July 13, 2013 3:23 PM
    Quote:
    Why would they sign a three year contract with another foundry if they planned on buying UMC?! Could of have been just a one year contract or they could have signed with UMC to begin with.


    Most propably because it takes time to get everything right with production... It would be a disaster to Apple if their own production would not be enough to full fill all needs. It is better to them to play safe and buy enough production capasity and even over produce prosessors untill they have stable income of own prosessors. They can afford it easily...


  • 1 Hide
    bigpinkdragon286 , July 13, 2013 4:29 PM
    Quote:
    ... The reality is, producing a major product line in the US is likely a quick ticket to a small profit margin or a failed product.


    I would also like to add that the US government, and even state governments are increasingly hostile to businesses, especially large ones, at this point. The red tape including screwy tax laws and environmental concerns, are a big turn off to businesses trying to set up shop. Having to hire a staff of people just to keep you out of trouble with government agencies does not make for better products or lower costs.

    While I like the idea of creating jobs in the United States, I at least can feel a bit of understanding why companies might not want to set up shop here. The companies that go into business for benevolent reasons are usually called charities, and that is hardly something I would consider Apple to be.
  • 0 Hide
    bassermann , July 13, 2013 4:34 PM
    Completely unrelated to this article, could the writers please stop saying "That said" in every third paragraph? The phrase has lost all meaning through over use. I love this website, I visit it every day and it is my number one source of tech news as well as in-depth hardware reviews but I cringe every time I read "That said".
  • 1 Hide
    piggys , July 13, 2013 5:28 PM
    Intel makes there CPU's in the USA. Global Foundries(GF) open up a plant in New York. GF are the main supplier to AMD. So, why can't Apple?
  • 1 Hide
    Quinn FitzGerald , July 13, 2013 5:58 PM
    UMC was never mentioned in the original article intro when I read it.

    I should also note people over at S|A forums have one thing to say: http://semiaccurate.com/forums/showpost.php?p=188908&postcount=39

    or, for those who do not want a link:
    Quote:
    Quote:
    http://appleinsider.com/articles/13/07/12/rumor-apple-buys-into-chip-fab-plans-to-build-its-own-silicon

    Oh noes, they are putting words in the Semi-Accurate mouth! (and they ain't wrapped in bacon)

    It's time to unleash the granny!
    Even the paywall they got partially wrong - Student Level is enough for most to know how wrong UMC is.
  • 1 Hide
    melvar , July 13, 2013 9:40 PM
    What does "capable of processing 50,000 wafers" mean? 50,000 wafers at once? Per day? Per Year?
  • 1 Hide
    Quinn FitzGerald , July 13, 2013 11:52 PM
    Quote:
    What does "capable of processing 50,000 wafers" mean? 50,000 wafers at once? Per day? Per Year?


    Typically the number of wafers processed means in a month. So 50,000 wafers a month.

    Just gonna do some quick math on Apple's SoC (let call next one 100mm*2 (probably much larger than it really is) + perfectly square (probably not true).

    That nets a max of 600 SoC's, which means provided Apple is using 100% of TSMC capacity, they could have upwards of 30 million SoC's per month (of course, that implies no flaws in any of them, and a lot of other stuff).

    cheers!
  • 0 Hide
    rwinches , July 14, 2013 6:18 PM
    Yeah, they should pack up the factory and ship it over here. Sorry, but there is a recession going on, so the shareholders can bite the bullet just like the rest of us. The markets are well over '09 levels so it's time to let the rest of us get some increase. There is a Intel fab in Albuquerque also. If wall street doing well meant the US economy was doing well, we would have our well paying jobs back.
  • 0 Hide
    internetlad , July 15, 2013 8:01 AM
    lol good luck with that, apple. I don't know if "Think Different" works in chip architecture.
  • 0 Hide
    lilcinw , July 15, 2013 8:30 AM
    Source: ISeeWhatYouDidThere
  • 0 Hide
    Quinn FitzGerald , July 15, 2013 7:56 PM
    Quote:
    Yeah, they should pack up the factory and ship it over here. Sorry, but there is a recession going on, so the shareholders can bite the bullet just like the rest of us. The markets are well over '09 levels so it's time to let the rest of us get some increase. There is a Intel fab in Albuquerque also. If wall street doing well meant the US economy was doing well, we would have our well paying jobs back.

    What are you even talking about? When did shipping a fab over here mean anything?

    There are multiple fabs (Intel, GloFo, Samsung) that would all fit what Apple is planning to buy.

    Please understand the situation before making idiotic comments like this...

    Thanks!

    ~cheers!