Analyst: Apple qualifying TSMC

SAN JOSE, Calif. – During the TSMC 2011 Technology Symposium here on Tuesday (April 5), Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) did not discuss its rumored foundry deal with Apple Inc.

At present, Samsung Electronics Co. Ltd. is making the Apple-designed A4 and A5 processors on a foundry basis for Apple.

Apple and TSMC have reportedly entered into a foundry relationship, sources said. As reported, TSMC will make the A5 dual-core processor and follow-on devices on a foundry basis for Apple’s iPad 2. Samsung will continue to make the A4 and A5 processors for Apple for the foreseeable future. 

TSMC this week rolled out what could be the industry’s first manufacturing process optimized for chips used in smartphones and tablets.The technology is a new member of its 28-nm process offerings. Called 28HPM or high-performance mobile, the process is tuned for smartphones, tablets and related products.

At the same time, Apple is also quietly qualifying TSMC as a foundry partner, according to an analyst. ''Now that Apple and Samsung appear to be going in different directions in terms of the Samsung foundry relationship (Apple is qualifying TSMC, we understand), these two companies don't have to pretend to be nice to each other sans a strategic partnership,’’ said Hans Mosesmann, an analyst with Raymond James & Associates Inc., in a report.

Apple may be moving to TSMC for good reason. First, Samsung and Apple are on a collision course in cell phones and tablets. There could be another reason.

''Apple's success in iPad/iPhone products is obviously not based solely on its internal Ax series apps processors; however, from a purely semiconductor perspective, we believe the long-term viability of the Ax series requires a significant redesign or the use of a merchant apps processor vendor (why bother if it is cheaper and better to buy it from somebody else),'' he said.

''A more interesting dynamic for us as we look at structural issues in the apps processor world is the massive size of the Apple A5 dual core coming in at approximately 122-mm(square) (45-nm at Samsung). The A5 is a honker of a chip and compares to the A4 at 53 mm(square) (45-nm at Samsung),'' he said.

''In comparison, Nvidia's Tegra2 dual core is a svelte 49mm2 (40-nm at TSMC). We strongly suspect the upcoming Tegra3 quad core this fall will be smaller than the A5, with industry observers pegging its size at 80mm2 (40-nm at TSMC),'' he said.

''Notwithstanding how the A5 is going to fit into the upcoming iPhone5 (run it at very low speeds to conserve battery life), from a semiconductor perspective, Apple is falling behind–way behind,'' he said. ''The A5 is within striking distance in terms of size to Intel's dual core Sandy Bridge at 140mm2, which addresses mainstream PC and server applications.''

There is another change in vendors for Apple. ''We expect some volatility today for OmniVision on comments from Sony's CEO last Friday night that damage to the company's Sendai camera sensor factory would delay shipments to Apple (unclear if it is for iPhones, iPods, and/or iPads),'' he said.

''Speculation over the last several quarters is that Sony had or is about to land CMOS sensor orders at Apple displacing partially or entirely OmniVision's incumbency in the iPhone4,'' he said. ''Our view since the beginning of the year is that Apple will split the CMOS sensor business in 2011 between Sony and OmniVision.''