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Apple/Samsung Chip Split To Benefit TSMC

January 18, 2013 - Written By Joe Levin

TSMC (Taiwan Semiconductor Manufacturing Company Limited) Chairman and CEO Morris Chang announced today at an investor’s meeting that the company will be producing close to 100% of chips using 28nm this year. This will mean that their shipment totals will triple and should boost revenue shares above the industry average of seven percent.

12% of TSMC’s revenue in 2012 came from 28nm chips, roughly $2.1 billion. Chang’s prediction is that number will jump to $6.2 billion considering that they are making an initial investment of  $9 billion in capital expenditures this year and even more going forward in 2014. The company recently had fourth quarter revenues of $4.5 billion with $1.4 billion net income.

Reports are that orders for the company’s 28nm chip are pushed out to Q3 of this year because of greater demand of ARM processors, baseband chips, graphics processors and x86 processors. These chips are used by some big names including Qualcomm, Huawei, NVIDIA and AMD. The hope is that TSMC will be able to keep supply in line with demand as they had trouble filling orders last year. Although they did eventually catch up.

Of course this also leads many to believe that the long rumored Apple and Samsung “chip split” has finally occurred. Not really surprising considering the obnoxious patent battles between the two companies the past couple of years. Apparently TSMC has already been making some Apple A6X processors which are being used in the fourth generation iPad. Switching away from Samsung’s 32nm chip could also lead to some power savings and better performance in future devices.

If this deal with Apple goes through, the word is that a foundry in the United States would be built code named “Project Azalea”. The rumor is that the facility will be built by Apple and run by TSMC although this has been denied by the latter.

Next up for the company, according to Chang, is a 20nm chip in which they are investing some of their capital funds. He claims interest in this new chip has been strong and they plan on a faster rollout than their 28nm with full production in 2014-2015.