Apple (NASDAQ:AAPL) reportedly offered Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) more than $1 billion to become a dedicated chip producer for the iPhone maker, but was denied. TSMC has said it intends to keep its interests in the rapidly growing smartphone market open. The company also denied an investment bid from Qualcomm (NASDAQ:QCOM), according to Bloomberg.
Don’t Miss: Who is Apple’s New FRIEND?
Currently, Apple relies on Samsung for the A-series chips used in its mobile devices, an increasingly uncomfortable scenario considering the intense rivalry the two share in the smartphone market and the legal confrontations they are involved in as a result. Samsung is also a supplier of displays and other device components for Apple.
TSMC, the world’s largest custom chip maker, already supplies Apple with iPhone and iPad chips through foundry services for Broadcom (NASDAQ:BRCM), CSR, Cirrus Logic (NASDAQ:CRUS), and Qualcomm.
While TSMC chairman Morris Chang told investors last month he would be happy to devote one or two factories to a single customer, the conditions in the separate deals from Apple and Qualcomm appear to have been unacceptable. Chief financial officer Lora Ho also said that dedicating a plant to a single product or customer was risky, since the client or technology could change.
“You have to be careful. Once that product migrates, what are going to do with that dedicated fab?” Ho said. “We would like to keep the flexibility.”
$1B is not even close to enough payment for a dedicated TSM 28 nm or 20 nm fab for Apple or QCOM.
Do you think INTC would really be interested in running 40 nm, 28 nm, or 20 nm ARM chips in INTC fabs at TSM or Samsung type chip prices? I don't think so. If AAPL wants to redesign with an INTC chip architecture and redo a lot of software, INTC will be happy to run the chips, but INTC advanced processes are Expensive. AAPL won't get low prices from INTC for Intel chips.