Apple’s Next-Gen Smartphone Chip Orders Reportedly Going to Samsung Versus TSMC [u]

Apple’s next generation smartphone chip orders are now said to be heading towards rival Samsung instead of Taiwan Semiconductor Manufacturing Co (TSMC), reports Reuters, citing Taiwanese media and research firm KGI Securities:

TSMC will be supplanted by Samsung in the production of 14-nanometre smartphone chips for Apple and Qualcomm beginning in the second half of 2015, KGI Securities analyst Michael Liu said in a note to clients issued late on Wednesday after a TSMC investor conference.

Qualcomm has already started working with Samsung to develop the chips, the Commercial Times reported on Thursday, citing market speculation. The Economic Daily News said without citing sources that Qualcomm had placed orders with Samsung.

The speculative reports sent TSMC shares down 4.6 percent on Thursday morning, despite the company reporting its highest quarterly profit since 2006 and noting revenues are expected to increase by a record 20 percent in 2014.

Apple has been sourcing TSMC for chip orders to distance itself from rival Samsung. Last week, the Wall Street Journal reported TSMC had started shipping its first batch of the A8 20 nm processors to Apple, marking the first time chip orders have gone to another company other than Samsung.

Earlier this month Digitimes reported Samsung and Globalfoundries would provide production of Apple’s 14nm A9 processor in 2015, which seemingly corroborates the note by KGI Securities that TSMC will lose out for next year’s chip orders. The move back to Samsung and Globalfoundries speculates TSMC is unable to meet Apple’s demand or possibly yield rates are too low to meet the Cupertino company’s high standards.

TSMC Chairman Morris Chang said the company’s market share in 16 nanometre chips will be smaller than “a major competitor” in 2015, while a leading share will be regained starting in 2016.

Update: Another Reuters story, which sought the interview of an analyst who attended the conference, noted the story of Apple and Qualcomm is “just a lot of speculation”:

Yuanta Securities Analyst George Chang, who also attended the conference, said of Apple and Qualcomm on Thursday that “This is still just a lot of speculation.”

“We haven’t even seen the iPhone 6 yet, so it’s too early to say anything about future products,” Chang said.