TSMC is the bellwether for not only the foundry business, since they are the dominant player, but also the semiconductor industry as a whole. You could also argue that TSMC is a sneak peek into the world economy since they build capacity based on their customer’s forecasts and the world now revolves around semiconductors.
The other thing you need to consider is what we call the “Apple Effect” meaning that as TSMC’s largest customer (both directly and indirectly from the Apple semiconductor supply chain), TSMC’s forecasts are a direct peek into Apple’s future.
With the iPhone 7 coming next month I thought it would be interesting to look at what is inside the iPhone 6s to see what may be coming next. In looking at the iFixit teardown here are the recognizable chips inside:
The iPhone 6s includes the A9 multi core ARM based SoC which was built on both the TSMC 16nm and the Samsung 14nm FinFET processes. This was the first time Apple dual sourced their SoC and now that I know the real reason why, I believe it will be their last. For the iPhone 7 I believe TSMC will get 100% of the business using their new 16FFC third generation FinFET process. The other chips (most of which are TSMC manufactured) inside the 6s include:
- Qualcomm MDM9635M LTE Cat. 6 Modem (vs. the MDM9625M found in the iPhone 6)
- InvenSense MP67B 6-axis Gyroscope and Accelerometer Combo (also found in iPhone 6)
- Bosch Sensortec 3P7 LA 3-axis Accelerometer (likely BMA280)
- TriQuint TQF6405 Power Amplifier Module
- Skyworks SKY77812 Power Amplifier Module
- Avago AFEM-8030 Power Amplifier Module
- Qualcomm QFE1100 Envelope Tracking IC
- Toshiba THGBX5G7D2KLFXG 16 GB 19 nm NAND Flash
- Universal Scientific Industrial 339S00043 Wi-Fi Module
- NXP 66V10 NFC Controller (vs. 65V10 found in iPhone 6)
- Apple/Dialog 338S00120 Power Management IC
- Apple/Cirrus Logic 338S00105 Audio IC
- Qualcomm PMD9635 Power Management IC
- Skyworks SKY77357 Power Amplifier Module (likely an iteration of the SKY77354)
- Murata 240 Front-End Module
- RF Micro Devices RF5150 Antenna Switch
- NXP 1610A3 (likely an iteration of the 1610A1 found in the iPhone 5s and 5c)
- Apple/Cirrus Logic 338S1285 Audio IC (likely an iteration of the 338S1202 audio codec found in the iPhone 5s)
- Texas Instruments 65730AOP Power Management IC
- Qualcomm WTR3925 Radio Frequency Transceiver
- Possibly a Bosch Sensortec Barometric Pressure Sensor (BMP280)
According to reports in the media, the iPhone 7 will not be too much different than the 6s so it is not a stretch to think that the chip suppliers will not change much. There is a rumor that Intel has won some of the modem business but as I mentioned previously I do not think (for technical reasons) it will be a significant portion if at all. Even so, TSMC manufactures the Intel modems so it does not really matter either way.
If you look closely at the TSMC Q2 investor call you will see significant optimism that can be mapped directly to Apple. First let’s look at CAPEX. TSMC is projecting a 20% CAPEX increase in 2016 primarily for 10nm and 7nm (10nm and 7nm share the same fabs as did 20nm and 16nm). This jibes with my belief that Apple will continue to use TSMC for the 2017 and 2018 iPhones. TSMC recently surprised analysts with excellent financial results and an optimistic outlook for 2016 and 2017. TSMC also made the prediction that they will have 70% of the 10nm business in 2017 which definitely supports my TSMC exclusive Apple business prediction.
Bottom line: TSMC is the key manufacturer of chips for the Apple iPhone and iPad products this year and next. If you believe as I do that the iPhone 7 will break Apple unit shipment records due to a strong upgrade demand from the iPhone5 and 5s installed base then TSMC has good reason to be optimistic for 2016 and 2017.