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TSMC Denied Apple’s Bid for Exclusive Chip Supply

TSMC Headquarters in Hsinchu, Taiwan

Source: TSMC Headquarters in Hsinchu, Taiwan | Official Website

It was reported that Apple offered Taiwan Semiconductor Manufacturing Co. $1 billion for dedicated production. This is believed to be the company’s attempt to diversify its mobile processor supply chain. However, TSMC declined the offer, as it aims to remain agile in a booming smartphone market.

Apple’s Offer for Exclusive Chip Supply Access for TSMC Denied

According to the reports, TSMC denied separate investment bids from Apple and Qualcomm, both of which wanted the chip maker to dedicate a part of its manufacturing line.

At the moment, the Cupertino-based company is sourcing its A-series chips from Samsung. It also supplies display and other components used in iDevices and MacBooks. This makes an odd partnership, as the Korean tech giant is considered as Apple’s biggest competitor in the smartphone industry.

What makes matter more complicated is the patent trial between both companies. Recently, Samsung paid $1 billion to the iPhone after it violated seven patents from Apple. The Korean company is also facing permanent injunction against eight infringing devices, with a sales ban hearing set on December 6.

Their rocky relationship may have prompted the iPhone maker to look for an alternative chip maker. However, it could also mean that Apple wants option as its iPhone and iPad business dramatically grows. During Apple’s conference call for the third fiscal quarter of this year, it was revealed that sales for iPad increased to 17 million units for the three-month period. The iPad sales were also strong, with a 28 percent increase compared to last year’s same period.

The Aim to Remain Flexible

On the other hand, TSMC Chairman Morris Chang said in a statement to investors last month that he is willing to devote a factory or two to a single customer. However, it appears that they either are not ready yet to take that step further or feel that Apple and Qualcomm’s bids were too low.

TSMC CFO Lora Ho added that they are not in need of investments nor do they want to sell a part of the company. She pointed out that dedicating a part of the company to a single product or customer could be too risky. It could also be a burden when the client or technology changes.

You have to be careful. Once that product migrates, what are we going to do with that dedicated fab? We would like to keep the flexibility.

Nevertheless, it was reported that TSMC components would land on future iDevices, as they were tapped to manufacture power management chips for Dialog Semiconductor.

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