Where there's smoke, there's fire.
Taiwanese tech publication Digitimes was out last week with a report that Apple
Taiwan Semi would be displacing current manufacturer Samsung. Apple and Sammy have always had a love-hate relationship, with the hate primarily manifesting itself in current events. The companies' patent-driven bickering has been escalating even as reports earlier this year pegged Apple as Samsung's biggest customer, with roughly $7.8 billion in supply contracts for the year. Roughly 26% of the component cost of the iPhone 4 goes to Samsung alone, when you include ingredients like the flash memory, DRAM, and current A5 processor.
This hasn't stopped the companies from suing each other. By potentially moving the production of its ARM Holdings
The report claims that TSMC negotiated a decent price on the contract in line with its overall gross margins, which have hovered around 46% throughout the first half of the year. Winning two generations of processors would still be a nice score for the company, which already fabricates ARM-based chips for Qualcomm
Samsung will still probably remain an important supplier for iDevices in the foreseeable future. Supposedly the conglomerate is one of three primary display panel suppliers lined up for the iPad 3's Retina Display, alongside LG Display
Taiwan Semiconductor stands to win more business as more chip companies transition to fab-lite or fabless models and outsource manufacturing. Add it to your Watchlist to keep an eye on it for possible buying opportunities.
Fool contributor Evan Niu owns shares of Apple and ARM Holdings, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Qualcomm and Apple. Motley Fool newsletter services have recommended buying shares of NVIDIA and Apple, creating a bull call spread position in Apple, and writing puts in NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.