Apple reportedly gives TSMC more chip business for next iPhone

Chip production for the next iPhone may already be underway and Apple is changing the mix of its suppliers, says one analyst.

Although we're months away from the expected annual iPhone refresh, Apple is putting the pieces in motion now. One of those pieces is the processor and according to an analyst report from KGI Securities, TSMC is getting a larger order for the chips than previously planned.

KGI's Ming-Chi Kuo, who has an above average track record when it comes to Apple insights, wrote that this was a last minute decision by Apple in the report obtained by Apple Insider.

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Apple typically spreads orders to produce its chips in order to reduce supply chain and inventory risk. Doing so at this point is almost late in the game as it can take months for chip foundries to properly prepare for production. Apple can't supply millions of new iPhones during a launch month if it has to wait for the processors and other components.

Kuo's report suggests that Apple has shifted the supply order because output yields from another chip-maker, GlobalFoundaries, are too low for Apple's tastes.

Samsung has long produced Apple's iPhone chips but TSMC gained some of the business last year. Apple might have considered Samsung for more chip production, said Kuo, had demand for the company's Galaxy S6 and S6 Edge phones been lower.

Since the phones are doing better than expected, he noted, Samsung would be more apt to concentrate production on its own chips for the handsets, particularly since these are the first Samsung phones that didn't rely on Qualcomm's processors. Samsung is using its own Exynos chips inside the new Galaxy S6 and S6 Edge.

See also: HTC and Samsung Android flagships disappoint: Back to the Apple iPhone 6 Plus