Taiwan's TSMC gets orders from Apple

June 30, 2013

Apple has struck a deal with the world's biggest contract microchip maker in what analysts see as an attempt to reduce its reliance on arch-rival Samsung, a report said.

The US tech giant forged the agreement with Taiwan Semiconductor Manufacturing Co (TSMC) earlier this month, according to the Wall Street Journal, which cited unidentified TSMC executives.

It said manufacturing of the chips, to be used in Apple mobile devices, would start early next year.

The Journal said the move is the latest in a series of efforts by Apple to lessen its reliance on parts produced by South Korea's Samsung.

But despite the deal with TSMC, Samsung will remain Apple's main supplier of high-resolution screens, and processors used in mobile devices through next year, the Journal said.

TSMC spokeswoman Elizabeth Sun declined to comment when approached by AFP.

"In line with the company's established policy, we will not comment on individual clients," she said.

Analysts see the deal as part of Apple's bid to diversify its supply chains and distance itself from Samsung, its main competitor in the .

"It is inevitable that Apple must move to reduce its reliance on Samsung while their legal lawsuits over patents flare," an analyst at a foreign firm in Taipei told AFP, declining to be named.

Samsung won a round in its long-running patents battle with Apple in early June when a US trade panel banned the import and sale of some older models of the iPhone and iPad.

In a separate patent fight in US federal court, Samsung was ordered last August to pay more than $1 billion for . A judge later slashed the award to $598.9 million.

By diversifying its supply chains, Apple could also cut its costs, Kuo Ming-chi, analyst at the Taipei-based KGI Securities Investment Advisory Co, told AFP.

"This is crucial as Apple's profit margin fell to around 37 percent in the first quarter, down from a peak of around 45 percent."

Kuo said the diversification policy was also reflected in Apple's movement of some of its assembly orders away from Taiwanese manufacturing conglomerate Hon Hai, also known as Foxconn.

Hon Hai employs about one million workers in China, roughly half of them based in its main facility in Shenzhen bordering Hong Kong.

Apple and TSMC started discussing working together to build chips as early as 2010, according to the Journal report.

Apple asked either to invest in TSMC, or to have TSMC set aside factory space dedicated to Apple chips, it said.

But both requests were rejected as the Taiwanese company wanted to maintain its independence and manufacturing flexibility, the Journal said.

Explore further: Chipmaker TSMC gets tablet, smartphone boost in 1Q

Related Stories

Chipmaker TSMC gets tablet, smartphone boost in 1Q

April 18, 2013

Taiwan Semiconductor Manufacturing Co., the world's largest contract chip manufacturer, reported an 18 percent jump in first quarter profit as increased global sales of smartphones and tablet computers boosted demand for ...

Taiwan's Hon Hai to hire 3,000 after Mozilla tie-up

June 20, 2013

Taiwan's Hon Hai Precision said Thursday it aims to hire up to 3,000 new employees to develop devices and software for Mozilla's Firefox operating system as it seeks to diversify from its core manufacturing services.

Tokyo court backs Apple against Samsung on patent

June 21, 2013

Apple Inc. has won a patent infringement lawsuit against Samsung Electronics Co. in a Japanese court, one of dozens of legal battles around the world between the technology giants.

TSMC reports 32 percent profit jump in 4Q of 2012

January 17, 2013

Taiwan Semiconductor Manufacturing Co., the world's largest contract chip manufacturer, reported a 32 percent jump in profits in the final quarter last year, benefiting from increasing global sales of smartphones and tablet ...

Recommended for you

Engineers use replica to pinpoint California dam repairs

June 26, 2017

Inside a cavernous northern Utah warehouse, hydraulic engineers send water rushing down a replica of a section of a dam built out of wood, concrete and steel—trying to pinpoint what repairs will work best at the tallest ...

Google to stop scanning Gmail for ad targeting

June 23, 2017

Google said Friday it would stop scanning the contents of Gmail users' inboxes for ad targeting, moving to end a practice that has fueled privacy concerns since the free email service was launched.

1 comment

Adjust slider to filter visible comments by rank

Display comments: newest first

not rated yet Jul 01, 2013
I wonder about the quality of the chip they will have made in Taiwan. Have other manufacturers had issues?

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.