Friday, July 15, 2011, 12:00 am

TSMC initiates trial manufacturing of Apple's next-gen A6 chips - report

By Josh Ong

According to a new report, Taiwan Semiconductor Manufacturing Company has begun trial production of Apple's next-generation A6 processors, lending credence to rumors that the iPhone maker is moving orders away from supplier and rival Samsung.

A source familiar with the matter told Reuters on Friday that test manufacturing of the next generation of chips, which are expected to make their way into devices in 2012, has begun.

"TSMC has got all the authorisation and details ready. Whether Apple puts in a formal order will depend on the yield rate," the source said. The report corroborates recent rumors suggesting the Cupertino, Calif., would tap TSMC for semiconductor orders as its relationship with Samsung has grown tense.

In June, numerous sources in the semiconductor industry claimed Apple would switch to TSMC for the A6 chip next year, with one report characterizing chatter about the deal as "deafening."

Early this year, it was said that TSMC could partner with Apple to produce the A5 chip for the iPad 2, but x-rays of the A5 revealed that Samsung has continued to manufacturer the custom processors.

The partial loss of Apple's business could come as a heavy blow to Samsung, which has warned of weakened demand for chips in the second half of 2011. The Korean electronics giant recently combined its component manufacturing businesses in hopes of buoying its display operations with the more profitable semiconductor side of the business.

While Apple is expected to be Samsung's largest customer this year with a estimated $7.8 billion in component purchases, the two companies are also fierce rivals and now legal opponents. Apple's top brass said in April that Samsung remains a "valuable partner," but tensions arising from the legal dispute between the rivals has worsened in recent months.

“It has become very public and very ugly, very quickly,” Gleacher & Co. analyst Brian Marshall said earlier this month after Apple filed a complaint with the International Trade Commission.