Exclusivity to TSMC’s production would make things very difficult for Apple’s competitors.
In an effort to better meet the demand of its mobile devices — and make things very difficult for its competitors — Apple has reportedly been bidding to secure exclusive access to TSMC’s (Taiwan Semiconductor Manufacturing Co.) custom smartphone chips. Qualcomm has also been bidding up against the Cupertino company, and both parties are believes to have submitted bids in excess of $1 billion.
If Apple became successful with its bid, it would provide the company with exclusive access to the world’s largest custom chip maker. TSMC would actually set aside production dedicated to making chips exclusively for Apple, according to sources familiar with the matter, who have been speaking to Bloomberg.
This is part of Apple’s efforts to satisfy the incredible demand of its smartphones, which continues to increase with every iteration. It would also give Apple an alternative supplier to Samsung, with which the company has been embroiled in several patent lawsuits that recently saw it awarded $1.049 billion in damages.
As for Qualcomm, it wants exclusivity to boost its chip supply. The company’s CEO, Paul Jacobs, said earlier this year that he was willing to write “big checks” to improve the supply shortages that have been limiting the company’s earnings growth this year.
However, TSMC isn’t interesting in making such a deal. According to its Chief Financial Officer, Lora Ho, it wants to retain control of its plants, and it doesn’t want to sell itself. It’s also concerned with the risk of dedicating one of its facilities to a single customer.
"You have to be careful. Once that product migrates, what are going to do with that dedicated fab?" said Ho. "We would like to keep the flexibility."
TSMC has said recently, however, that it would be open to dedicated one or two of its factories to a single customer. It could be that Apple is forced to explore this option rather than bidding for outright exclusivity of its production.
Source: Bloomberg
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