The Apple and Samsung relationship is an interesting one. On one hand they have co-developed some of the most innovative products on the market today (iPod, iPhone, iPad, iWatch) yet they are fierce competitors in the mobile market. Some call this type of business relationship “frenemies” others refer to the old Italian proverb “keep your friends close, but your enemies closer.” Personally I refer to it as “foundry business as usual.” Let’s take another look at the Apple/Samsung relationship and see if we can get a better picture of what is really going on here. This of course is based on my experience, observations, and opinions so feel free to correct me if I’m wrong, but I’m not.
Apple became a chip company in the early 1990s with the assistance of VLSI Technology. This was using the ASIC business model where Apple could “toss” an RTL level design over to VLSI and have them deliver finished chips. The first chip was for Apple’s PDA, the Newton, which lost out to the much easier to use BlackBerry and Palm Pilot.
The smartphone (iPhone) was the next device to usher in semiconductor design at Apple. In 2007 the first iPhone was powered by the APL0098 SoC designed by Apple and the newly created Samsung Foundry Division using the same ASIC business model that VLSI Technology pioneered. The first chip used Samsung’s 90nm technology which was one process behind TSMC’s 65nm that offered twice the gate density and a power reduction of up to 50 percent.
The next two iterations of the Apple SoC were released in 2008 and 2009 using Samsung’s 65nm technology. At the same time TSMC was delivering 40nm chips with twice the density of 65nm with significantly reduced power requirements. In 2009, 2010, and 2011 Apple used Samsung’s 45nm which delivered density and power requirements just below TSMC’s 40nm. In 2012 and 2013 Apple used Samsung’s 32nm process but TSMC was already at 28nm which again offered increased density and lower power. At the end of 2013 (iPhone 5+ and iPad Air) Apple used Samsung’s 28nm. Apple also ushered in the 64-bit smartphone with the iPhone 5s beating industry SoC leader Qualcomm.
For the iPhone6 and iPad Air2 in 2014, Apple switched to TSMC’s 20nm which offered a 1.9x density and 25% power advantage over 28nm. The switch from Samsung Foundry to TSMC is a hotly debated topic especially since Apple is now back at Samsung for the 14nm A9 to be released in September of 2015. According to analyst estimates, Apple paid Samsung $2.7 billion for chips in 2014 which is significantly lower than the $4.3 billion Apple paid Samsung in 2013. So yes, the Apple business is a very big deal for the foundries, absolutely.
Apple claimed its semiconductor manufacturing independence with the 2008 acquisition of P.A. Semiconductor and the 2010 acquisition of Intrinsity which enabled them to move from the ASIC business model to the fabless semiconductor powerhouse they are today. If you want my opinion, which clearly you do if you are reading this, Apple bases the process technology decisions on technology and the ability to deliver said technology, simple as that.
I know that Apple evaluated TSMC’s 28nm for the A6 and A6x SoCs but since TSMC was the only foundry yielding at the time TSMC’s 28nm pricing and capacity were in question. At 20nm however, Apple wrote TSMC a very large check to get right-of-first-refusal and most-favored-nation pricing which squeezed out competing SoC vendors (QCOM, MEDIATEK).
At 14nm Samsung developed an LP process specifically for Apple which started risk production in Q4 of 2014 making it viable for the Apple A9 SoC (iPhone 6+) release in Q3 2015. The big shocker here is that Samsung released their own 14nm SoC (Exynos) for their flagship mobile device the Galaxy S6 in the first half of 2015 beating everyone’s 14nm delivery expectations, including my own.
TSMC was two quarters behind Samsung with their higher performance 16nm FinFET++ implementation which will be used in the lower volume Apple A9x SoC business for the iPad refresh in Q4 2015 (the A9 versus A9x volumes are reportedly 70% versus 30%). I also heard that Apple evaluated Intel Custom Foundry 14nm, but to no avail.
10nm will be the next foundry battleground. Samsung and TSMC have both discussed taping out 10nm customer designs in the fourth quarter of 2015 which fits the timeline for Apple’s next product refresh using the A10 and A10x SoCs. Intel on the other hand has been very quiet which is not necessarily a good sign for the competition. Intel surprised the industry with 22nm FinFETs. Another 10nm surprise could certainly be in the making. My guess is that Apple will go to TSMC for 10nm but at this point it is just a guess.
Bottom line: Today, Apple is clearly the most influential foundry customer worth billions of dollars in revenue annually. Apple’s regular product refresh is now driving the foundries harder than I have ever seen and that includes Intel and Samsung. Competition is what makes the fabless semiconductor ecosystem strong and who better than Apple to lead that effort?