Rumor: Apple Buys Taiwan Fab to Build Its Own Chips

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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  • 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.
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  • Well they have the cash to pull this off.
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  • Honestly, I saw them doing this years ago. I'm surprised it took this long.
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  • 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'
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