Apple, Qualcomm failed to buy TSMC chip exclusive rights [report]

Apple, Qualcomm failed to buy TSMC chip exclusive rights [report]

Summary: According to reports, Apple and Qualcomm failed in their bids to invest for exclusive access to TSMC chip supplies.

SHARE:
TOPICS: Apple
6

Apple and Qualcomm have failed in separate bids to purchase exclusive access to TSMC chip supplies for iOS devices.

Bloomberg reports that by making separate investment offers in the Taiwan Semiconductor Manufacturing Co., reaching in excess of $1 billion, the two firms attempted to secure exclusive access to the custom chip maker's products.

If successful, Apple and Qualcomm would have been granted production rights set aside exclusively for them, according to people close to the matter. However, TSMC wants to retain control of its plants -- even though Chairman Morris Chang told investors last month that it was possible to dedicate one or two factories to a single client.

The chip maker says it doesn't want to sell part of itself and does not need cash for investments, and intends to remain flexible enough to switch chip production and development among customers.

TSMC, which supplies chips to tech giants including Qualcomm, Broadcom and Nvidia, would have offered the chance for Apple to rely less on rival firm Samsung for mobile device components. As the bid for exclusivity failed, it could be an option for Apple to pursue the idea of taking over a factory.

Apple and Qualcomm are both tying to satisfy increasing global demand for mobile devices -- and securing additional manufacturing resources is part of the process. The smartphone market -- which is a dominant factor in chip production and development -- is currently worth $219.1 billion according to Bloomberg analysts.

Previous rumors suggested that Apple was working with TSMC, however, production issues were cited as a problem -- which resulted in the tech giant staying with Samsung for the time being. 

Topic: Apple

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

6 comments
Log in or register to join the discussion
  • Two Ways

    Apple has historically acquired the ability to get things into apple products that they don't produce in house two ways. They invest in their supply chain partners in ways that provide Apple with dedicated capacity. And they buy small companies, integrate them into Apple and thus grow Apple's internal capacity.

    While Apple has used the second approach mostly to gain design capacity ( semiconductor design, SIRI, etc.) this time they might consider reaching farther. Apple is effectively uncross trained financially in this area and there is, at least theoretically, an opportunity to gain more than just capacity. If Apple could find the right place / team in which to invest, they might be able to tap into more advanced semi processing than their rivals can get through TSMC or Samsung, for instance. Think Intel. Intel has processing technology that is a generation or so ahead of Samsung or TSMC, but Intel doesn't 'foundry' other folks designs very happily.

    On the other hand, intel has to see that the writing is on the wall for the x86 architecture and likely rues the day they unloaded the ARM architecture. If Intel and Apple could figure how to 'divvy things up' there might be a very interesting deal to be had here. Imagine if you will that Apple and Intel acquire MIPS, design several advanced SOCs that Intel takes to the low power server market and Apple uses in mobile devices. Such a deal could usefully mobilize some of Apple's cash horde, keep Intel growing as a merchant semi maker, and give both Apple and Intel strategic advantage in their respective markets.
    z2217
    • There is no writing on the wall for x64/x64. The silvermont/airmont still

      crush arm on perf/watt. Intel is getting into the mobile market in both tablets and smartphones and in just a couple years will have gained a pretty good share of the former and when airmont GA's will start growing the later. The more they can bring the airmont schedule forward the betert off theyll be. Theyll certainly still be way ahead of arm when they do. After that it wont take long for the handset oems to see the value add as worth the switch.
      Johnny Vegas
    • Apple and partnerships

      Apple has been burned several times by "partners". Remember the PowerPC? It was exactly this type of partnership, where Apple partnered with IBM and Motorola -- it was happy start, but both failed/betrayed Apple and they had to move to Intel and ARM architectures. I believe Apple has learned their lessons from that experience.

      Another issue is that Intel is not "lean" enough for Apple. They have very wide products, most of which are completely useless for Apple.
      danbi
  • Apple should just build their own plants

    The average cost of a chip plant is about $2 billion a piece. Apple could build 5 plants with no problem and they would have much better quality control over them. A couple could even be built in the US. I'm sure there are states that would give them tax breaks and loan guarantees to get a manufacturing plant.
    laequis
    • BUT...

      if they made American plants they would have to pay American wages. At this time, even after another depression-like area, we won't lower our expectations and demand the same "assumed worth" wages as we did ten years ago. Millions of people, experienced or under entry level, would flood Apple to get a change to bite into that cash cow. Sure, the States need the jobs but how can companies compete when the American people itself kill the companies due to wages and excuse it with "need". The pool of motivated and quality trained people in this country is increasingly diminishing.
      Apple would do a huge favor to the country by building plants here but you can compare the construction costs of US factories over the costs of building outside the States. Add in labor and you can basically flush the idea completely.
      My two cents and a ladle to stir the pot.
      Gralyndr
      • Paying american wages

        Most semiconductor manufacturing plants are extremely automated and there are not many humans working there. Doesn't matter where the plan is, those who work there are well paid anyway.

        The US based plants will have other costs. But, nothing prevents Apple to build the plants elsewhere.
        danbi