Samsung is no longer Apple's exclusive supplier of CPUs as the latter inked a deal with TSMC. The Taiwan Semiconductor Manufacturing Co. was first rumored to have a contract with Apple but it's only now that the deal has been confirmed.
TSMC is said to have started shipping microprocessors to Apple. These chips will be used for products due for release in the next few months. The yet-to be-announced iPhone 6 will be the first iDevice to use the 'A8' from TSMC. The next iPad will also have the A8.
The A8 chip by Samsung uses a 20-nanometer production process and technology while the previous A7 uses a 28-nanometer process. The A8 is expected to feature improved efficiency and better performance, as well as, speed.
The Apple-TSMC partnership proves the company doesn't want to work with Samsung anymore. Of course, Apple cannot easily break its deal with Samsung even if it's a close rival. Apple has been depending on Samsung for chips for most of its iOS products.
Apple is already gearing up for iPhone 6 production. This could only be the beginning of a major partnership between Apple and TSMC. Samsung could be out of the equation but it won't be anytime soon.
The Taiwan-based manufacturer also supplies Apple with other chips like the Touch ID sensors first installed on the iPhone 5S. There is a big chance TSMC would also begin 16-nanometer production next year.
TSMC recently posted its quarterly sales and included in the report are new clients like Apple Inc. Sales last Q2 went up to NT$183 billion from NT$181 billion. Meanwhile, Samsung's second quarter sales went down a bit.
A Sanford C. Bernstein analyst is positive about the deal.
"TSMC's near-term outlook is much stronger than our expectation. Medium-term, we can't see the next growth driver after Apple's business. Long-term, the structural challenges from cost escalation and competition from Intel and Samsung also persist," analyst Mark Li wrote.
TSMC said demand for smartphone parts is higher than before. The company is still confident about higher sales despite the competition getting tighter between them and other companies like Semiconductor Manufacturing International Corp. and Globalfoundries Inc.