One of the strengths of the fabless semiconductor ecosystem is competition since it keeps innovation high and prices low. One of the challenges of fostering competition is that you have to make good on a threat of using a competing product during a pricing negotiation. Well, in my opinion, for the next version of the iPhone, Apple did just that. Apple put Samsung and TSMC against each other and as a result will use both Samsung 14nm and the better performing TSMC 16nm FF+ for the 2015 iProducts. Since Samsung is a quarter or two ahead of TSMC on FinFETs, Samsung will get the iPhone business in Q3 2015 and TSMC will get the iPad and maybe a MAC Book in Q4 2015. Qualcomm, NVIDIA, AMD, Broadcom, and the other fabless heavyweights will follow suit. It’s all about wafer price negotiations and that is what keeps us strong.
Common wisdom suggests that Apple would not do business with Intel or Samsung as they both compete with Apple on some level. Samsung aggressively sells competing phones/tablets and Intel gives free SOCs to companies that compete with Apple. But when you are buying billions of dollars of wafers, price tends to trump all. Now let’s talk about the rumors overheard at ARM TechCon last week:
Out of the total volume of A8 chips, Samsung is producing around 30 percent, while TSMC is making 70 percent, sources familiar with the matter said.
The first rumor is that Samsung will get 30-40% of the Apple A8 business. Apple will use the same A8 SoC for the iPhone 6 and iPad products. I’m hoping the A8 will be clocked up for the iPad because I know it can go faster than 1.4GHz! Bottom line: Samsung is NOT supplying 20nm A8 parts to Apple. Show me an iPhone or iPad tear down that proves otherwise and a new iPad is yours. Also according to ZDNet Korea’s Cho Mu-hyun:
Kim Ki-nam, president of the Korean electronic giant’s semiconductor business and head of System LSI business, told reporters at Samsung’s headquarters in Seoul that once the company begins to supply Apple with chips using its latest technology, profits “will improve positively”.
Samsung is expected to start producing application processors (APs) for clients such as Apple, Qualcomm, and AMD, using its 14-nanometre process around the end of the year. Kim declined to comment on when Samsung will start mass producing said chips for clients.
The second rumor is that Samsung won the Apple business for 14nm. As I mentioned above, Apple will use both Samsung and TSMC for the next generation of iProducts in 2015 so this is a half-truth. To me a half-truth is also a half-lie and I have a serious problem with that especially coming from a publicly traded company. Samsung should publicly clarify that it is NOT supplying 20nm wafers to Apple and they are NOT the only vendor supplying Apple FinFET wafers in 2015. Transparency inspires trust, right?
In regards to Intel Custom Foundry, being stuck between Samsung and TSMC in a wafer price war is no way to start your day. Given that TSMC 10nm is on track with Intel Foundry 10nm (remember Intel Foundry has yet to ship production 14nm) and Samsung is a close third, 10nm will be another serious pricing challenge. And let’s not forget that GOLBALFOUNDRIES and IBM are also in the10nm hunt. Competition is for the greater good of the fabless semiconductor ecosystem, absolutely.