Path of least resistance
There's been a fair bit of talk about Apple shifting its foundry (outsourced semiconductor manufacturer) from Samsung to TSMC recently. The reason there's even speculation is a) it's Apple, b) Apple's move to designing its own mobile chips, c) Apple used to buy Samsung chips, and d) the rivalry between TSMC and GlobalFoundries.
Apple has gone from being a non-player to arguably the the biggest single customer any semiconductor foundry could have. Apple has already shipped a ton of iPads and iPhone 4s - both of which contain its A4 chip - and sales of the A5 toting iPad 2 alone will be in the tens of millions. And then there's the iPhone, iPod touch and Apple TV.
Before it launched the A4 last year, Apple relied on Samsung-branded chips for the iPhone. But Samsung also has a big foundry business and Apple continued to use Samsung even after it designed its own chip. But it's unrealistic to expect Apple to continue to rely on just one supplier for such an important component.
In discussions around why tablet rivals are struggling to compete with Apple on price, attention is increasingly turning to how it manages its supply-chain. Apple has a lot of cash and decent visibility on demand for its products. This enables it to make big bets on components and it has been known to put in massive orders.
Not only does this provide economies of scale, it also means Apple can usually meet even the most voracious demand for its products. How many tablet competitors can match that? Possibly only Samsung.
Many rumours from the notoriously reliable Chinese language tech press, that Apple has switched to TSMC for the manufacture of the A5 and future chips, are now being reported as fact, despite the lack of any on-the-record confirmation from either company.
Maybe these reporters are being briefed by TSMC insiders, and the two companies are working together in some capacity. But I think a more natural fit for Apple is GlobalFoundries and have every reason to believe they too are working together.
My thinking is simple: Samsung is much closer to GlobalFoundries than it is to TSMC, so moving from Samsung to GlobalFoundries is easier. Just look at the Common Platform Alliance - this is a collaboration between Samsung, GlobalFoundries and IBM over semiconductor design and manufacturing. Its primary purpose is to standardise processes between the three companies so it stands to reason that moving between them is made easier for customers.
Then there's ARM, which has been a conspicuous supporter of GlobalFoundries from day one. The A4 chip featured an ARM Cortex A8 CPU and it's generally assumed the A5 is Cortex A9, so Apple is likely to favour any foundry with the best relationship with ARM. Last summer ARM announced a design platform partnership with, among others, Samsung and GlobalFoundries.
It stands to reason that Apple will diversify its foundry portfolio, if only to spread risk. And it may be that TSMC has been taken on to help supply Apple with the number of chips it expects to need. But I wouldn't be at all surprised to hear that it's already working with GlobalFoundries, and for GlobalFoundries to ultimately become Apple's biggest foundry partner.
