TSMC, which since 2014 has enjoyed sole-source status for Apple's A8 processor that powers the iPhone 6, is wrestling with Samsung to dominate the supply of Apple's new A9 and A10 processors, according to the analysts. To enhance its pricing power, Apple has also qualified Global Foundries as a third source, the analysts say.
The focus is on Apple's yet-to-be released A10 processor, expected sometime in 2016.
'TSMC will receive one-third of Apple's A9 allocation and half of its A10 allocation,' said Warren Lau, an analyst with Maybank Kim Eng, in an August 24 report. 'An assumption of 50% is reasonable given Apple's desire to maximize its bargaining power with suppliers, 'Lau said.
Samsung, which this year was two quarters ahead of TSMC with its 14nm FinFET process, is seeing strong revenue growth through 2015, while TSMC's 16nm ramp is not going to be big until the fourth quarter, HSBC analyst Steven Pelayo said in a September 16 email to EE Times. Production of the A10 will stay at the 14 / 16nm node, even though some think TSMC's 10nm process may be ready in time for the A10 launch, Pelayo said.
Other analysts said reports that TSMC will regain the mantle as sole supplier to Apple are unfounded.
'We disagree with rumors that TSMC will enjoy 100% of the A10 orders,' according to Fubon Research analyst Carlos Peng in a September 3 report.
'Some say the Apple A10 / A10X will be made on 10nm, but we believe Apple will stay at 14 / 16nm as 10nm will not be ready despite TSMC's strong push,' said Mark Li, an analyst with Bernstein, in a July 16 report .
Apple accounts for 30% -40% of TSMC's 16nm capacity, according to Credit Suisse analyst Randy Abrams in a July 17 report. That percentage is likely to grow to most of the iPhone line as TSMC brings up its InFO (integrated fan out) packaging technology next year, he said. The node will broaden to include graphics, FPGA and mobile chips, according to Abrams.
Some disagree, however.
'InFO is not a precursor for winning A10 orders,' Lau said. 'InFo offers the benefits of lower costs and a smaller form factor with a higher pin count. However, we believe Samsung's latest packaging technology, embedded-Pin-on-Pin (ePoP), offers even more impressive results of 40% savings in area size as it combines mobile DRAM, NAND and application processor in one single stack die. '
Price cutsFoundries have cut wafer prices for 14 / 16nm twice, barely two months into initial production this year, according to Lau. Apple appears to be biggest beneficiary as it has fully qualified Samsung, Global Foundries and TSMC for the A9, he added.
'This is also the first time Apple is adopting multiple foundry suppliers,' said Lau. 'As TSMC risks idling its 16nm capacity if it does not agree to Apple's latest asking price, we believe its first-quarter 2016 sales could again be hurt . '
Weaker prices come as slowing smartphone, tablet, PC and TV demand is coupled with foundry customers' excessive optimism and fear of high-season capacity constraints, according to Abrams. Those factors are triggering an extended inventory correction, he said.
The top-10 fabless companies, based on consensus estimates, are averaging out to a modest annual sales decline in 2015 for the first time since the 2008 financial crisis, said Abrams, who expects a rebound in 2016 as inventory clears.
TSMC has trimmed its 16nm capacity plan several times this year, from an original 80,000 wafers / month to a more realistic 50,000 recently, due to its loss of first-source customers such as Qualcomm and Apple to rival Samsung, said Lau. TSMC will probably have to trim more capital expansion in 2015 and 2016, Lau said.
This year, TSMC led the world's chipmakers with the largest capital expansion plan, set within a range of $ 10.5 billion and $ 11 billion. Http://www.eetimes.com/document.asp?doc_id=1326378
Still, 14 / 16nm will be a much stronger node than 20nm, generating as much as $ 2.5 billion in foundry sales this year and another $ 8- $ 10 billion in 2016, according to Bernstein analyst Li.
Taking advantage of its early lead in the 14nm FinFET race, Samsung is extending its reach and services to more customers and applications, according to Lau In addition to its two baselines in 2015 -. 14LPE (early) and 14LPP (Plus) - Samsung will introduce three variants in 2016: 14LPC (Compact), 14LPA (Advanced) and 14LPH (High-Performance), Lau said.
Samsung uses 14LPE for its in-house Exynos 7420, which powers Galaxy S6 and Note5 high-end smartphones. The company's 14LPP is for the upcoming Apple A9 and the S820, Qualcomm's next-generation high-end application processor. Samsung's 14LPC is similar to TSMC's 16LCC, which saves costs by having few mask layers. Both are targeted at low-to-mid-end smartphones or consumer electronics.
14LPH is developed for next-generation smartphone / tablet applications such as Exynos M, Apple's A10, and Qualcomm's S8X0 in 2016.
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