Investors have been talking about Apple (NASDAQ:AAPL) hooking up with Taiwan Semiconductor (NYSE:TSM) for years. However, switching chip foundries is much easier said than done and the transition can take quite a while. Well, DIGITIMES now reports that the long-rumored deal has finally been inked as Apple continues to distances itself from Samsung.
Taiwan Semiconductor has inked a three-year deal with the Mac maker, according to the Taiwanese publication's supply chain sources. The chip manufacturer will provide the next three generations of A-chips to Apple, which will progress to 20-nanometer, 16-nanometer, and then 10-nanometer manufacturing processes. Currently, Apple's latest A6 is built on Samsung's 32-nanometer node.
Test runs for the A8 may start as soon as next month, with 20-nanometer production ramping up next year to correspond with new infrastructure slated for the same time frame. Some of the production capacity could get upgraded later for 16-nanometer chips. Taiwan Semiconductor is supposedly scheduled to mass produce the A9 and A9X in the third quarter of next year.
DIGITIMES says the A8 will power the iPhone due out in 2014, and the A9 and A9X subsequently should be found in the 2015 models. Taiwan Semiconductor has already begun early stage risk production for its 20-nanometer node, which commenced in the first quarter.
There was no mention of whether or not this deal was exclusive or not. That still leaves the possibility of Apple tapping Intel (NASDAQ:INTC) for foundry services, another partnership that's been rumored a time or two. Intel ex-CEO Paul Otellini admitted that not partnering with Apple on the original iPhone was one of his biggest regrets, and perhaps new CEO Brian Krzanich will make up for it. The chip giant has already begun to offer foundry services to smaller customers in order to utilize its idle capacity and unrivaled manufacturing prowess.
Apple surely wants to cut Samsung out of the loop, and Taiwan Semiconductor and Intel would be happy to pick up the slack.
Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.