Would a Switch to TSMC Hurt the Entire Industry?

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If a rumored switch to TSMC from Samsung for A-series chips goes through, Samsung might not be the only ones feeling squeezed you. TSMC’s _other_ clients might also start feeling the pinch as TSMC works to meet demand from Apple.

From Digitimes:

Demand from Apple is expected to be huge, said the observers, adding that allocation of TSMC’s available advanced process capacity among its major clients will be a critical decision to be made by the foundry.

TSMC’s advanced process offerings serve the world’s major fabless IC firms including Altera, Qualcomm and Nvidia. While being capable of providing sufficient capacity to Apple, TSMC also does not want to upset its existing major clients, the observers noted. Allocating efficiently its production capacity will be a focus for the foundry in 2013, the observers believe.

Apple’s iPhone and iPad devices collectively demand almost 200 million CPUs every year, the observers estimate. TSMC will need at least more than 200,000 12-inch wafers ready to satisfy the huge demand from Apple, the observers said.

via Apple CPU orders raise concerns over TSMC production capacity

Regardless of whether the rumors are true, and AppleInsider points out Digitimes has been hit and miss in that department, if Apple changes suppliers for any parts the effects are felt throughout the industry. Apple ramps up tablet production, suddenly key parts are harder to find for other folks. Apple considers switching to TSMC, Samsung considers not opening another chip foundry.

The obvious challenge for TSMC would be how quickly can it ramp up production to meet Apple’s demands (200,000 12-inch wafers a year!) and meet existing obligations. AppleInsider also mentioned Apple’s attempt to, essentially, buy out TSMC’s production capacity for Apple alone:

Another rumor that surfaced in August claimed that Apple made an offer for around $1 billion that would have made TSMC a dedicated chip producer to Apple alone. The offer was allegedly rejected by TSMC, as the company was said to be interested in staying involved in the booming broader smartphone market.

Yeah, that would cause a few grumbles in the industry.

Photo from TSMC.

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