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Apple Gets Its First Batch of iPhone Chips From TSMC

timothy posted about 4 months ago | from the pronounced-just-like-it-looks dept.

Businesses 45

redletterdave (2493036) notes that Taiwan Semiconductor Manufacturing Co. (TSMC) has shipped its first batch of microprocessors to Apple as the iPhone maker looks to diversify its overseas suppliers. Apple will continue to rely on Samsung for its microprocessors, but as the rivalry between Apple and Samsung heats up in the mobile and soon wearable arenas, the deal with TSMC allows Apple to be less reliant on Samsung and therefore have more leverage with respect to price negotiations for future chips, as TSMC has supplanted Samsung Electronics as Apple's chief chipmaker for iPhones and iPads. Since 2011, Apple has been striking deals with other display and chip makers around Asia to reduce its dependence on Samsung. As a result of this slowdown in sales, Samsung on Monday announced operating income for its fiscal second quarter had sunk to a two-year low, blaming 'weak' sales of low- and medium-end smartphones, strong competition and subpar demand.
It may not be a household name like Intel or AMD, but TSMC is the world's biggest chip maker by revenue.

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It's a huge risk (0)

Anonymous Coward | about 4 months ago | (#47425141)

TSMC has consistently lagged behind other foundries in process improvements.

Re:It's a huge risk (1)

cheesybagel (670288) | about 4 months ago | (#47425205)

Yes especially in the last couple of years. This negatively impacted NVIDIA and AMD's GPU business more than once. They also had packaging issues a couple of years back. Remember the NVIDIA GPU recall?

TSMC is the world's largest foundry business. They do not design chips. They manufacture chips. Their competitors are companies like GlobalFoundries. AMD does not have factories anymore, everything is manufactured at TSMC or GlobalFoundries, and until a couple of years ago Intel did not allow 3rd parties to use their chip factories.

Re:It's a huge risk (1)

ArcadeMan (2766669) | about 4 months ago | (#47426925)

I would love to see Atmel go with Intel, just to see what could come out of it.

I'd like to see the ATtiny and ATmega series running above 20MHz. Sure there's other Atmel uC that can do that, but in non-DIP packages and at a much higher price.

Re:It's a huge risk (1)

John Jamieson (890438) | about 4 months ago | (#47426985)

I don't remember TSMC even keeping up with AMD most of the time, and they were a node behind Intel at almost any time.

It appeared to me that TSMC may have seemed to keep up, but AMD and Intel were producing huge dies and had to have a process really fixed before they ramped. TSMC had the luxury of announcing they were at a node, while only producing simple stuff with it and fixing the bugs over a long period of time.

An Aside: In my opinion Intel chip designs have been less than spectacular given the R&D resources they have, it has been the process engineers that have given them the dominance in performance.

Re:It's a huge risk (1)

cheesybagel (670288) | about 4 months ago | (#47428607)

Yes usually Intel has the process lead followed by the group of IBM, GlobalFoundries (which owns the fabs that used to belong to AMD), Samsung. TSMC comes way after that. The main advantage of TSMC has been that it is a lot more responsive to customer requests and they have a lot of capacity. Plus they do not compete with any company in chip design since they are a pure play foundry.

An Aside: In my opinion Intel chip designs have been less than spectacular given the R&D resources they have, it has been the process engineers that have given them the dominance in performance.

This has been the case since, like, forever. At one time AMD actually had process parity with Intel. This was around the time of the 180 nm node. Anyone that remembers Intel processors back then knows they sucked. Horribly.

Re:It's a huge risk (0)

Anonymous Coward | about 4 months ago | (#47429817)

Posting anonymously not to blow moderations.

There are different domains in silicon: high-performance, memories, Flash, SoC. Each have their own variants, and different fabs prioritize domains differently depending on their businesses. Intel is the kind of high-performance. Samsung is top for memories and Flashes. But when it comes to system on chips, where low power and low cost are key, TSMC is the king. They're typically ahead of the pack for mobile SoC, and if they seem to lag it's often because the new process is not yet cost effective: someone else can brag they're first, but the cost is not right for the market anyway.

If you don't keep these differences in mind and compare when Intel got high-performance 22 nm to when TSMC had 20 nm (or even 16FF), then there is a big lag. But if you compare the lag between 22 nm for Intel SoC with TSMC, then it's much reduced. And in SoC Intel is only there due to massive subsidies, so one can doubt they're cost competitive in the SoC market. And if one compare high-end to SoC, one really compare apples to oranges.

I assume much of the /. crowed is in the IT/PC field, and not very familiar with the fabless world. In the PC field TSMC got some bad press through NVidia and AMD GPUs behind later than desired (but on high-perf processes, not the priority for TSMC), and also 28nm SoC being later than big customers would have liked (QCOM, Nvidia...). Still in 28nm SoC TSMC was the first, and head and shoulder above anyone. They still own this market, even if there will be more competition. For mobile SoC in fabless, TSMC is the gold standard. And likely even with IDM (Intel) in the mix. But one need to compare what's comparable.

Samsung's slowing sales... (4, Insightful)

TWX (665546) | about 4 months ago | (#47425199)

I suspect that a good part of Samsung's slowing sales is consumers that are tired of spending more money all of the time to do the same thing. I've got a Galaxy SII. It does everything that I need it to do. It's paid for. I don't foresee any needs that a newer phone would fulfill, so short of a broken phone or a paradigm shift I don't see a need to shell out several hundred dollars to have essentially the same functionality.

Geek-chic likes to talk about and to chase the latest gadgets, but the hype really isn't as widespread as reports would indicate, and even those that have chased the newest have often gotten tired of doing it without any real, tangible improvements.

Re:Samsung's slowing sales... (1)

Tough Love (215404) | about 4 months ago | (#47425217)

Geek-chic likes to talk...

chique.

Re:Samsung's slowing sales... (0)

Anonymous Coward | about 4 months ago | (#47425397)

chique.

sheikh.

Re:Samsung's slowing sales... (1)

Shatrat (855151) | about 4 months ago | (#47425559)

Schickimicki

Re:Samsung's slowing sales... (1)

93 Escort Wagon (326346) | about 4 months ago | (#47426301)

Schick Shadel

Re:Samsung's slowing sales... (1)

CastrTroy (595695) | about 4 months ago | (#47425281)

It's amazing how fast phones reached this level of performance. The iPhone was only released 7 years ago, and the first BlackBerry, which many would consider the one of the first smart phones, 15 years ago. In that short amount of time, we have gone from always wanting the newest thing, to models which are 2 years old being sufficiently fast enough, and people are starting to see little reason for upgrades. The PC market hit a similar point a few years back. And since then, you have 2 basic types of PC owners. Those who simply must have the newest stuff be it for games, work, status, or just because. This makes up a small percentage of users. And the rest of us, who will buy the cheapest PC.Laptop we can find (usually around $400), and use it until the hardware breaks. Cell phones are pretty much headed the same way. There is very little reason for people to continue to spend $700 on a phone every 12-24 months.

Re:Samsung's slowing sales... (0)

Anonymous Coward | about 4 months ago | (#47425423)

Even the first-gen iPhones -- and, obviously, similar phones -- were fast enough for most people in terms of hardware, it was more a matter of wastefulness in software and limitations of the OS. Now we've finally hit the point where increases in hardware performance overcame the (ever-increasing) wastefulness of the software enough that most users are content.

Re:Samsung's slowing sales... (1)

TWX (665546) | about 4 months ago | (#47425461)

Smartphones well predate the Apple and Blackberry options. Palm and Qualcomm developed the pdQ-series in the nineties and they were on sale by 1999 and were direct variants on the Palm Pilot series of personal organizers, which themselves date back to the early nineties, and had many of the components that a phone-based device would want like an address book, a calendar, a tasks list, a calculator, etc.

And that's not even going into the other companies that built personal organizers around this same time.

Re:Samsung's slowing sales... (1)

mveloso (325617) | about 4 months ago | (#47425753)

old smartphones are to today's smartphones as:

A BMW 7 series is to a model-T ford
GPS is to maps
Color TV vs Stereoscopes

I'd put my iPhone 1 up against a psion any day of the week.

Re:Samsung's slowing sales... (1)

TWX (665546) | about 4 months ago | (#47425853)

I wasn't saying that old smartphones were in any way comparable to modern ones. My point was that smartphone development has been occurring far longer than most people realize, and is in-parallel with PCs in that the performance characteristics of the device have outpaced the capabilities of the software and user experience to the point that there's not a whole lot of benefit in upgrading without an external reason to do so.

And as to your analogy of GPS vs maps, I can use a map without any electrical power, and I can identify on the map, if it's a good one, which roads my low-ground-clearance car can traverse, versus which roads my 2wd small pickup can traverse, versus which "roads" I'll need a 4x4 or truck with significant ground clearance to use. Most of the time the latter aren't even noted on GPS systems.

Re:Samsung's slowing sales... (0)

Anonymous Coward | about 4 months ago | (#47428613)

It sounds like you just have a shitty truck...

Re:Samsung's slowing sales... (1)

TWX (665546) | about 4 months ago | (#47429415)

I do actually! It cost less than two smartphones!

Re:Samsung's slowing sales... (1)

johnsie (1158363) | about 4 months ago | (#47428931)

Maps don't show road quality.

Re:Samsung's slowing sales... (1)

TWX (665546) | about 4 months ago | (#47429423)

You're incorrect. The maps that I just picked up indicated limited-access freeways, divided highways, two-lane highways, lesser paved roads, unpaved roads, and forest service trails. Different lines for each type.

Re:Samsung's slowing sales... (1)

BasilBrush (643681) | about 4 months ago | (#47433947)

The first smartphone was the Nokia Communicator. 1996.

Re:Samsung's slowing sales... (0)

Anonymous Coward | about 4 months ago | (#47425307)

But for the hassle of selling my old phoen and another 200$ out of pocket I can't use my frigging eye's to unlock my phone....

As someone who works in the mobility field I can tell you users a like frigging sheep. You give one user an iPhone 5 instead of a 4S and the whole frigging world now NEEDS to have an iPhone 5, the 4S just isn't good enough anymore....

Side note we also deal in Galaxy's so not an apple only shop ;P But most users who want an android device are smart enough to help themselves.

Re:Samsung's slowing sales... (2, Insightful)

gaiageek (1070870) | about 4 months ago | (#47425719)

"... blaming 'weak' sales of low- and medium-end smartphones."

I'd suggest that their weak sales has something to do with the fact that their phones are ridiculously overpriced. Samsung seems to think that they're the 'Apple' of Android phones and that they can price their offerings accordingly. Look at their Galaxy S4 Mini and just announced S5 Mini models: mid-range devices (both have only 1.5GB RAM) with flagship prices.

Then there's Samsung's "budget" phones. They also just announced the Galaxy Ace 4 [gsmarena.com] . The most obvious difference from last year's Ace 3 [gsmarena.com] ? They cut the RAM in half, from 1GB to 512MB. That's right, they actually made the specs worse. Maybe we should thank them for not making the processor slower, too (they both have 1GHz dual-cores).

Meanwhile, we've hit the point of having very decent Android phones from the competition available for $100 or less purchased outright (see LG Optimus F6). The S4 Mini, now a year old, is still running $300+ purchased outright. Why would the average buyer spend an extra $200 for incremental upgrades like an 8MP camera vs 5MP, 1.5GB of RAM instead of 1GB?

Samsung's had a great run, but I think we're seeing the beginning of the end, with the competition nipping at their ankles.

Re:Samsung's slowing sales... (0)

Anonymous Coward | about 4 months ago | (#47427929)

So you are able to boil down your phone and pricing analysis to a single number and spec? That's amazing!
"Comparing other things is soooo hard, so instead I just find some number! Comparing two numbers is easy!! Oh I so much have missed the days when I could look at the processor speed and instantly know what the best computer was!!"

Re:Samsung's slowing sales... (0)

Anonymous Coward | about 4 months ago | (#47429913)

I'd suggest that their weak sales has something to do with the fact that their phones are ridiculously overpriced. (...) Look at their Galaxy S4 Mini and just announced S5 Mini models: mid-range devices (both have only 1.5GB RAM) with flagship prices.

Since you boil it all down to one number, these are bad phones compared to what... an iPhone 5s with just 1 GB of RAM? Why is Apple allowed to charge 800 USD for a phone and Samsung is not allowed to ask for half that much?

Re:Samsung's slowing sales... (0)

Anonymous Coward | about 4 months ago | (#47431223)

Maybe because different platforms are different, and iOS and it's app ecosystem don't require as much RAM as Android in order to function properly?

Re:Samsung's slowing sales... (1)

tlhIngan (30335) | about 4 months ago | (#47426487)

Well, the real reason is when you're on top, there's only one place to go and that's downhill.

Samsung's dominance in the Android market is legendary - it's what, 90% of all Android phones? (take Google I/O's 1B unique devices in the past month, that would be 900M of them Samsung. And given sales figures, ~20-30M (2-4%) are SGS5's, 80M or so are SGS4 (9%). All the rest are thousands of lower end models (SGS3, 2, and all the Galaxy S variants that are really just cheap phones with fancy branding).

Like how Apple rode iPod up the growth curve, Samsung rode the Galaxy family (low end phones to high end flagships) up the consumer smartphone curve.

And when you're #1...

Samsung can still be a luxury brand, they just need to act like one and use materials that speak "high end" - get away from the plastics and into more interesting stuff. Metal, for instance - try some more exotic metals.

Re:Samsung's slowing sales... (1)

alvinrod (889928) | about 4 months ago | (#47427893)

Samsung's dominance in the Android market is legendary - it's what, 90% of all Android phones?

It's not that high. A C|net article [cnet.com] from a few months ago puts them at slightly more than 30% of the global share, which is still pretty damned impressive. What's been impressive is that Samsung has been one of the only companies actually making money. HTC just posted that they were back in the black for the first time in a while and neither LG, Sony, or any of the other big players have done much better than break even. Motorola bled like stuck pig both before and after Google acquired them. Blackberry and Nokia all but disappeared.

In the first quarter of 2014, Apple and Samsung together had 106% of industry profits. [businessinsider.com] That number only makes sense because all of the other companies (China wasn't included) lost money. That's what has been most incredible with the company.

Re:Samsung's slowing sales... (0)

Anonymous Coward | about 4 months ago | (#47426533)

IOW they should be more efficient at planned obsolescence.

Re:Samsung's slowing sales... (0)

trawg (308495) | about 4 months ago | (#47426899)

I would say you are 100% correct - in the Android ecosystem. I am exactly the same; I have a relatively new Nexus 4 and before that I had a Nexus One that I used until it was basically a painful experience because it just kept running out of space.

The N5 is basically the same phone and there's not a lot the Samsungs offer that interest me.

But Apple has a different model - they don't have thousands of different options. It's just one new model every couple years. They have a prestige associated with the iPhone that has almost /nothing/ to do with what the phone can actually do - it's just about having the new phone.

Most of the people I know who live in the iPhone world are largely non-technical types. With few exceptions they all want to be on the latest version - baffling to me as someone that actually looks at features.

Maybe this will taper off but so far I think Apple are just killing it.

Re:Samsung's slowing sales... (1)

rsborg (111459) | about 4 months ago | (#47429795)

I suspect that a good part of Samsung's slowing sales is consumers that are tired of spending more money all of the time to do the same thing. I've got a Galaxy SII. It does everything that I need it to do. It's paid for. I don't foresee any needs that a newer phone would fulfill, so short of a broken phone or a paradigm shift I don't see a need to shell out several hundred dollars to have essentially the same functionality.

THere's a lot that an S4 or S5 will do that your S2 cannot - though you may not appreciate it, including things like Bluetooth4 or a larger battery, better camera or support for more innovative features on the latest Android (or TouchWiz) release.

Personally I have an iPhone and I upgrade every several years with my wife leapfrogging so one of us has the latest phone. Apple has perfected the upgrade treadmill - you're compelled but not forced into upgrading, and they make the features on each new generation worth the upgrade.

Re:Samsung's slowing sales... (0)

Anonymous Coward | about 4 months ago | (#47433315)

Samsung is undoubtedly saturating their own market. They're running in to the exact problems that nearly killed apple pre-jobs-return. Too many confusing product lines with too much overlap. Inconsistent product quality. Too many conflicting goals. (Also too much samsung crap shovelware where the default google/android software is clearly better.)

Apple may launch a new iphone every year but in reality most iphone users don't upgrade every year. You can comfortably skip 3-4 generations and still have a usable device that gets regular software updates. I kept my 4 until the 5s launched. Apple is fine with this business model. Samsung is not. Samsung's growth honeymoon is over and they no longer ship the volume they were once used to.

For that matter, Samsung needs Apple more than Apple needs Samsung. Apple can and will and IS getting their supplies elsewhere.

Why do we care? (0)

Anonymous Coward | about 4 months ago | (#47425255)

Apple designer breathes in and then ... out again!

Re: Why do we care? (0)

Anonymous Coward | about 4 months ago | (#47425367)

But but but... It's magicalâ!

fortune 1 company diversifies supply (1)

alen (225700) | about 4 months ago | (#47425315)

News at 11

Almost every company half of apple's size has multiple vendors for every part of their product

Re:fortune 1 company diversifies supply (1)

coinreturn (617535) | about 4 months ago | (#47425419)

News at 11

Almost every company half of apple's size has multiple vendors for every part of their product

Not when it comes to semiconductors; especially custom ones. Also, one newsworthy spin is that Apple is diversifying away from a competitor.

Nedt week's story (0)

Anonymous Coward | about 4 months ago | (#47425341)

Samsung gets its first chips from TSMC

TSMC not the largest (2)

John Jamieson (890438) | about 4 months ago | (#47426929)

TSMC is the largest pure play foundry, not the largest chip manufacturer.

Re:TSMC not the largest (0)

Anonymous Coward | about 4 months ago | (#47440459)

I was going to call you out on this, but it appears you are correct.

They had US$20 billion in revenue 2013. Intel had US$ 52.708 billion in revenue. This surprises me, because you can bet that TSMC are shipping more square meters of silicon than Intel. I guess most of that revenue is externalised to their customers, where-as Intel controls their entire supply chain from blank wafer to OEM packaged chip.

Honestly (1, Interesting)

Kuberz (3568651) | about 4 months ago | (#47427073)

I busted my smartphone screen about a year ago (The Motorola Droid Razr XT912). I ordered a new screen, and while I waited for my new screen replacement I reactivated my old Blackberry Bold World Tour (I think it was the 8950? Could be wrong).

I actually enjoyed going back to my blackberry for a few weeks, it has a lot of glitches, and it only has 3g support, so it caused a few headaches. But I use my phone as a phone, so the fact that it could call, text, and do my e-mail was plenty for me. I don't ever use the camera, I don't use any apps except a web browser and Pandora. And honestly, I still love the way blackberry handled email and text. I still miss Viigo, which in my mind, is the single greatest app of all time (Blackberry bought it, and ruined it /sigh).

I have a lot of friends that have the latest and greatest, but honestly they are just fanboys. They show me all these "new" features that are "soooo revolutionary" and I couldn't be more turned off. I will never by a phone with a fingerprint scanner, I see that as a security liability. I won't buy a phone that has a higher pixel density than my eyes can even comprehend (it's just wasted power). I won't buy a phone because it has the latest and greatest OS version (that's why I use Cyanogenmod, no bloatware, and all the new features I could want). I won't buy a phone because it has a faster 4G radio, when cell companies have your bandwidth restricted to the point where you'd blow through all your data in a matter of minutes (and restrict your speed after a certain point, even if it's unlimited). I won't buy a phone that I can never truly own, because of a locked bootloader.

Idk how many people out there are like me. But the phone I would buy, is the phone built for the consumer. Not so locked down that the only way I can upgrade or change the OS is with the original manufacturer's permission. A phone built lean, not so crammed with fancy things I don't need it'll cost a few paychecks to replace/repair if I drop it.

But I really see this going more and more in the direction of desktop computing. Where we've started to see the plateau of not technology itself, but the plateau of the technology the average person needs.

If these companies want to keep increasing their bottom line, there needs to be more innovation, and less of increasing performance numbers. I'm no Apple fanboy, but it seems like these companies are just riding out Apple's innovation and then acting surprised that that innovation has a life expectancy.

Maybe Google project Ara is a step in the right direction? Maybe the Amazon phone? Only time will tell.

Re:Honestly (1)

johnsie (1158363) | about 4 months ago | (#47428941)

Cool story, bro. I stopped reading as soon as you mentioned 3g. This is 2014 and not every consumer has the same requirements or wishes as you.

Re:Honestly (0)

Anonymous Coward | about 4 months ago | (#47429783)

If these companies want to keep increasing their bottom line, there needs to be more innovation, and less of increasing performance numbers.

But you just spent several paragraphs trying very hard to prove to us that you're doing just fine without innovation, and people who do like innovation are "fanboys." C'mon, tell us. What do you really want?

By the way, you mention the BlackBerry Bold web browser, but that was a complete piece of junk compared to contemporary Mobile Safari--in fact, iPhone was probably the first mobile pocketable device of any kind that had a web browser that didn't completely suck. It was the main reason I threw out the BB as quickly as possible after my employer started deploying iPhones.

They will suck but so what (1)

gelfling (6534) | about 4 months ago | (#47428051)

We live in a new era where quality is shit and no one cares. Fuck it.

Re:They will suck but so what (1)

johnsie (1158363) | about 4 months ago | (#47428953)

Go back to playing snake on your black and white nokia then.

Apple chips made by Intel? (0)

Anonymous Coward | about 4 months ago | (#47463439)

Are there any reasons why Apple doesn't manufacture all their chips at Intel? They've already switched their laptops and desktops to Intel chips, why not use their fabrication centers or chips themselves like the Atom?

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