The debate among the analyst community as to which of Taiwan Semiconductor (NYSE:TSM) or Samsung (OTC:SSNLF) has won the Apple (NASDAQ:AAPL) A9 manufacturing business continues to rage on. On March 12, analysts at Daiwa Securities (via Barron's) claimed that Taiwan Semiconductor would "earn most of the A9 orders thanks to its superior yield ramp and manufacturing excellence in mass-production."
Now, a new report from Cowen (via Barron's) supports that claim, saying that Taiwan Semiconductor has indeed won the majority of the A9 business. Let's take a closer look at what the report had to say.
What's the evidence?
According to the note, "TSMC has started to aggressively ramp 16nm." The report also talks about aggressive pull-ins of 16nm related equipment orders. It also says that thanks to "very good yield and very aggressive pricing" Taiwan Semiconductor has been able to nab most of Apple's A9 business during 2015.
Is that enough evidence to suggest that Taiwan Semiconductor has won most of the Apple orders?
The fact that Taiwan Semiconductor is pulling in equipment orders and "aggressively ramping" 16nm doesn't necessarily mean that it has won the majority of Apple's orders. Remember that much of the fabless semiconductor industry relies on Taiwan Semiconductor, and an aggressive ramp of 16nm could mean that the company is simply getting ready to go into production for its many other customers.
For example, there's a reasonable chance that Qualcomm's (NASDAQ:QCOM) upcoming Snapdragon 820, which is expected to begin sampling to customers in the second half of 2015, will be built on Taiwan Semiconductor's 16nm technology. Other mobile companies such as MediaTek will also likely need 16nm capacity in place for product roll-outs next year.
Aside from mobile, I suspect that graphics processors (which are large chips and relatively high volume products) from NVIDIA will be built on TSMC's 16nm technology. I also expect that the network processor vendors, such as Broadcom, will be keen on moving to Taiwan Semiconductor's 16nm process as soon as feasible.
In short, there are a lot of potential customers for Taiwan Semiconductor's 16nm technology. This means that the fact that the company has begun ramping that technology now doesn't necessarily indicate that it has won the majority of Apple's business. However, if TSMC's yields are as good as claimed and pricing is as aggressive as reported, then this wouldn't be out of the realm of possibility.
Here's what might run counter to this idea
Over at the EETimes, Rick Merritt -- who attended the Industry Strategy Symposium, described as "an annual gathering of semiconductor executives" -- reported that "Qualcomm is said to have exclusive rights to the new 16nm TSMC process for perhaps six months or so."
This, according to Merritt, is due to the fact that Qualcomm helped Taiwan Semiconductor develop its 16-nanometer technology. If this is the case (and if Apple didn't participate in the 16nm development, too), then it's hard to imagine that Apple will be the first out of the gate with chips based on 16nm.