Apple recently announced their latest processor, the Apple A7, which is made by Samsung and launched with the iPhone 5S. According to a recent report, Apple will be cutting Samsung’s production on their next generation processor, the Apple A8.
According to the report, Samsung will make around thirty to forty percent of the Apple A8 processor, and TSMC will be making the majority of the chips.
TSMC are said to be making between sixty and seventy percent of the new Apple A8 processor. Apple are obviously once again looking to rely less on Samsung and spread the manufacturing across multiple manufacturers.
Apple’s Strategic Shift in Processor Manufacturing
This strategic shift by Apple to diversify its processor manufacturing partners is not entirely surprising. Over the years, Apple has been gradually reducing its reliance on Samsung for various components. This move is seen as part of Apple’s broader strategy to mitigate risks associated with depending on a single supplier and to foster competition among its suppliers, which can lead to better pricing and innovation.
By involving TSMC (Taiwan Semiconductor Manufacturing Company) more heavily in the production of the A8 processor, Apple is leveraging TSMC’s advanced manufacturing capabilities. TSMC is known for its cutting-edge technology and has been a key player in the semiconductor industry. Their expertise in producing high-performance chips is likely a significant factor in Apple’s decision to allocate a larger share of the A8 production to them.
Implications for the Semiconductor Industry
The shift in Apple’s manufacturing strategy has broader implications for the semiconductor industry. Samsung, despite being a competitor in the smartphone market, has been a crucial supplier for Apple. The reduction in Samsung’s share of A8 production could impact Samsung’s semiconductor business, although Samsung’s diverse portfolio and strong market position may help mitigate any adverse effects.
On the other hand, TSMC stands to benefit significantly from this increased collaboration with Apple. The additional business from Apple could further solidify TSMC’s position as a leading semiconductor manufacturer. It also highlights the growing importance of TSMC in the global tech supply chain.
Moreover, this move by Apple could encourage other tech companies to consider diversifying their supply chains. The semiconductor industry is highly competitive, and companies are constantly seeking ways to optimize their production processes and reduce dependencies on single suppliers. Apple’s decision could set a precedent for other companies to follow suit.
In conclusion, Apple’s decision to cut Samsung’s production share of the A8 processor and increase TSMC’s involvement is a strategic move aimed at reducing risks and fostering competition among suppliers. This shift has significant implications for both Samsung and TSMC, as well as the broader semiconductor industry. As Apple continues to innovate and push the boundaries of technology, its supply chain decisions will undoubtedly play a crucial role in shaping the future of the tech industry.
Source The Verge
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