Apple’s Implications for Semiconductor

Apple’s iPhone 6 alone represents at least 50K wafer starts/month plus the iPad (A8X). What could the Iphone 6S/7 & A9 mean? What about the iWatch? Apple is the technology and volume driver of the semiconductor industry so lets take a look at the broader implications.

If we do the math the A8 is 89mm2 and 8.47 X 10.5mm. Using a die calculator that means that roughly 675 die can be squeezed onto a 12 inch wafer. If we assume a 75% yield we get 500 good die per wafer (I like to use round numbers). If we take 74.5 million iPhones over three months that’s about 25 million a month (or 34K an hour…but who’s counting?) Divided by 500 per wafer and you get 50K wafer starts a month, give or take, depending on yield etc… That sucks up a significant chunk of a fab and doesn’t leave a lot of room for other customers.

The A9 could consume more than 100k wafer starts…
If we stretch and presume that Apple forces Samsung into eating the yield loss and goes whole hog at 14nm the wafer starts could get excessively high. We could assume a similar die size A8 though we would bet that the A9 will be larger with more functionality (SoC integration).

If we presume the same roughly 675 potential die on a wafer then apply a guesstimate of 20% yields we would get 135 good die per wafer, if the die size were larger we might only get 100 good die per wafer. If we assume that Samsung can get its act together on 14nm FinFET and manages to get 40% yields then that would be 270 good die at a similar die size.

If we assume that Apple continues to run at 25M phones a month we could see 100K wafer starts a month of capacity dedicated to the A9 (unless yields get better faster). This again, brings us back to our recent newsletter questioning whether the A9 will be 14nm FinFET or not.

The iPad Air 2 – A8X is no slouch either..
The A8x in the iPad Air 2 has 3 cores and 8 GPUs compared to the A8 which is dual core with 4 GPUs. The A8 is small at 89mm2 versus the 128mm2 A8x. The larger die size is due to doubling the number of GPUs and adding a third core. If we guess that each wafer could produce up to 450 A8x parts , using a yield of 75% is about 340 good die per wafer. Apple just sold a bit over 21M iPads in the quarter (7M per month). If we presume that 4M of those will be equipped with the A8X then that’s at least another 12K wafer starts/month.

The iWatch “S1” SOC….
Though not likely to be a big seller at first, we think the iWatch will be a constant climber unlike the DOA Google Glass. Likely to start off slow then ride the coattails of the iPhone and iPad so probably not a lot of wafer starts for the iWatch. We have already heard more buzz about the second generation iWatch even before the first generation is out. My guess would be the first gen will be an early adopter/ learning tool type of device, followed by a more realistic and refined gen2.

Korea, Austin and maybe Malta?
Looking at the number of wafer starts that Apple will be driving, combined with increasing sales then multiplied by crappy yields, we are talking about Apple dominating a number of fabs. This could keep Samsung’s logic fabs in both Korea and Austin very busy as well as GloFo (if they get past the delay).

Then add in memory and support chips…
All we have talked about so far are the main SOC’s for Apple. You have to add in all the memory, both NAND and DRAM as well as all the other many support chips which are not insignificant in terms of fab capacity. Apple has gone to 2GB of DRAM for the iPAD Air 2 after disappointing people with on 1GB on the iPhone 6. Upgrading DRAM on the next iPhone is likely and average NAND installed continues to grow. All in all, we are talking about a lot of fab capacity being driven by Apple and its huge success.

Longer term looks good despite near term slow down….
Despite the fact that the industry is hitting a bit of a soft spot on 14nm foundry and logic roll out, the long term demand for square inches of silicon remains quite good. We see no reason for Apple to slow even when looking at the currency forex headwinds. International sales were 65% and that was with an overly strong dollar. The iPad Pro and the iWatch will be a nice chaser to the amazing Q4 sales of iPhones which blew past all expectations. Luckily the mobile and IOT markets are growing much, much faster than the Wintel Duopoly is fading. Intel is also lucky to have the “cloud” to sell processors to.

Apple driving the bus…..
Apple is firmly in command at the drivers seat of the tech industry bus. Semiconductors, software, servers, IOT, the cloud, financial, media even Google and android are all along for a great ride on our way to over 100M devices a quarter and beyond. Its no longer the VW Microbus that Steve Jobs sold to fund the start of Apple but somewhere he is smiling at his vastly upgraded new wheels.

Robert Maire
Semiconductor Advisors LLC