The mystery of which company will manufacture Apple's (AAPL -1.10%) A9 chip, which is slated to debut in the next-generation iPhone, has been a topic of hot debate. Some reports have claimed that Samsung (NASDAQOTH: SSNLF) will manufacture the chip, while others suggest it will come from Taiwan Semiconductor (TSM -3.23%).
Recently, I presented evidence that Apple was designing its next-generation chips on both companies' manufacturing technologies, so Apple can go with one or the other (or both). Although Samsung has indicated on both its conference calls and, according to ZDNet, in direct statements to the press, that it will build next-generation chips for Apple, the debate over exactly what is going on continues to rage.
Here's what DigiTimes says
In a pre-publication note, DigiTimes stated that, "according to industry sources," Taiwan Semiconductor "is expected to secure 40-50% of the A9 orders for next generation iPhones." If true, this suggests Samsung will manufacture 50%-60% of Apple's A9 chips.
Now, given that TSMC's stated production timeline for its 16nm FinFET Plus process doesn't quite align with the next iPhone launch, but Samsung's does, can this report be true? If so, what's actually going on?
A potential scenario: Samsung takes the lead, TSMC joins in later
Given that Apple will sell the iPhone 6s/6s Plus for quite a while after a presumed September 2015 launch, Samsung could be the "exclusive" supplier for the initial slug of sales of the next-generation devices, while models built at TSMC could be added into the mix later.
This scenario would fit statements made on Taiwan Semiconductor's July earnings call that it would have a lower 14/16-nanometer share relative to Samsung in 2015 but expects to regain share in 2016. Keep in mind, though, that the company has traditionally had a much broader customer base than Samsung's foundry, which would also help TSMC regain 14/16-nanometer share in the 2016 time frame.
Should investors believe this report?
Last year, ahead of the iPhone 6 launch, it seemed as though Apple had originally planned to use both TSMC and Samsung for the A8/A8X. However, early this year, a report from BlueFin Research (via Barron's) surfaced that Samsung was experiencing significant 20-nanometer yield issues that put its 20-nanometer manufacturing plans "on a temporary hold."
I think that while there might be some truth to the DigiTimes piece claiming that Samsung/TSMC will split the A9 chip orders roughly 50/50, it's still early enough that the situation is subject to change. I wouldn't be surprised if Apple wants to split the orders approximately evenly in order to make sure neither of its foundry partners had a stranglehold on the iPhone maker. Only time will tell how the orders ultimately are split.
