Stephen Silver
While Apple's relationship with TSMC relationship is expected to continue, analysts find the pair are heavily dependent on one another, in a way that holds risk for both companies.
Apple is expected to keep TSMC as its sole provider of application processors for the iPhone and iPad for the next two years, according to industry analysts cited by EE Times in Taiwan.
Apple has used TSMC as a chipmaker since 2014. Reports in January had TSMC reaching a deal to provide all of the "A12" chips for the 2018 iPhone lineup, and production began in May.
The Apple/TSMC relationship, while it's been lucrative for both parties, remains risky for them as well. Apple does not have a backup supplier for the chips, nor has it moved to diversify its supply chain for them, the way it's begun to for screen panels and other components.
As for TSMC, it is heavily dependent on Apple, which provides about 75 percent of its business. And, while Apple is in a position where it could conceivably move on to a different supplier at some point, TSMC would likely find themselves in huge trouble if Apple ever walked away.
This is not without precedent. Imagination, a British firm that formerly designed the GPU in the iPhone, iPad and Apple Watch, put itself up for sale last year after Apple dropped them, ultimately selling to Canyon Bridge Capital Partners. Another supplier, Dialog Semiconductor, has seen its stock drop based on rumors that Apple may change how it handles power management chips.
However, according to EE Times' sources, there aren't many rivals out there likely to take away TSMC's Apple business, as neither Samsung or Intel is seen as having much chance to replace them.
TSMC, back in July, trimmed its outlook for the year. While this was attributed at the time to a decline in demand for chips used in cryptocurrency mining, the 2018 iPhone cycle is seen as crucial in helping them recover from a bad quarter.
William Gallagher
Malcolm Owen
Charles Martin
20 Comments
If Apple were to switch from TSMC to somebody else it wouldn't be as devastating for TSMC as the Imagination example. When Apple moved to TSMC, some of TSMCs customers went to GloFo or Samsung. If Apple left TSMC, some of those second-tier customers would return. It's just a game of musical chairs. Apple is the best customer, but they aren't the only customer.