SAN JOSE, Calif. - At present, Samsung Electronics Co. Ltd. is making the Apple-designed A4 and A5 processors on a foundry basis for Apple Inc.
That could soon change. As reported, Apple and Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) have entered into a foundry relationship for the A5 and follow-on chips, sources said.
Now, according to an analyst, another player is pursuing Apple's foundry business: Intel Corp. Intel is already supplying x86-based processors for Apple's PC line. Intel is also dabbling in the foundry business and hasrecently struck a dealwith Achronix Semiconductor Corp.
''Based on a number of inputs, we believe Intel is also vying for Apple's foundry business,'' said Gus Richard, an analyst with Piper Jaffray & Co., in a new report.
''It makes strategic sense for both companies. The combination of Apple's growing demand and market share in smart phones and tablets gives Intel a position in these markets and drives the logic volume Intel needs to stay ahead in manufacturing,'' Richard said.
''Intel's manufacturing lead gives Apple an additional competitive advantage in these markets and distances it from Asian competitors that are knocking off its products,'' he said. ''Furthermore, it would also serve to weaken Samsung who is a significant competitive threat to both companies.''
Samsung will remain Apple's main foundry-at least for now. ''While it will take a few years for Apple to shift foundry suppliers, we believe Apple is shifting away from Samsung,'' he said. ''We believe TSMC will start getting revenue from Apple in Q4 of this year. We believe the recent patent lawsuit between the two companies is further evidence to support our belief that Apple is moving its silicon needs elsewhere.''
Samsung and TSMC each have the fab capacity to support Apple. The question is clear: Does Intel have the capacity?
''Samsung has just completed a 30K-40K wafer start per month logic plant in Austin Texas to support its foundry business of which Apple is its largest customer,'' he said. ''Based on the die size of Apple's A5 processor, Apple needs roughly 23K wafers a month for the A5. We
believe that Apple moving its foundry business away from Samsung is what has recently driven Samsung to reduce equipment orders, as it will likely repurpose this capacity for memory.''
Apples challenge is to prevent its i-whatevers from turning into over-priced boutique products for its cultists, the same fate as the Macintosh after the Wintel juggernaut replicated the GUI of the Mac.
The ARM - Foundry ( TSMC / Samsung / Global F ) - Android OS combo is generic like WinTel, lower cost and already has a larger market share than iPhone. Many new / second tier companies in growth markets are using this platform.
It could be the turn of the events that will hit Samsung to oblivion. Yet, we have to ask if Intel should be everywhere. This is very scary to have Intel hold the hottest Apple in their hands. It consolidates that power - badly.
If Apple thinks Intel can deliver better ARM products than Samsung, and give Apple an edge over the crowded market then it will do it. Apple needs something like this. Either Samsung or Intel.
I don't think Intel would ever make low margin SoC/CPUs on the state of art process node if they didn't have a choice. I however, did hear CEO Otelleni say in 2006, that Intel's future is high volume, and process tech, and lower margins, not what they have been doing with HVM, but expensive CPUs. They could hope to make up the profits with more traditional Server/HPC CPUs for businesses and governments. Not really surprising, this idea is floated.
Intel would have to deliver a stunning x86 low voltage, higher performance SoC device to even be looked at as an ARM replacement. That seems unlikely with ATOM, even at 22nm.
Once again, EE Times readers have offered a lot of valuable opinion and reasonable speculation. Let me just add a couple points briefly even if they have been alluded to previously. Moving to Intel as a foundry does not mean moving from ARM to X86. It could be further down the road and be something proprietary developed (or acquired) by Apple. Also, Intel has lots of motivation to take on Apple business, not least of which might be staving off a surging Samsung who have long set their sights on being the world #1 semiconductor company.
This gives too much to Intel, in return for what exactly? I am not sure Apple should go down this road. They should stick with the well-known and trusted pure foundries. Granted the tie-up with Samsung is problematic but a tie-up with Intel would open up more and bigger problems in the future.
Apple is moving in the direction of rivalary with an old friend. I think it's the inner fear of Android and also the fact that Smamsung keeps it's profit margins lower and thus can outperform Apple any time!!!
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