Next month, Taiwanese chip maker Taiwan Semiconductor Manufacturing Company (TSM - Get Report) is set to gradually increase production for its 20-nanometer process. A new report from Taipei Times mentioned that Mark Liu chief executive officer for TSMC claimed this would be the most significant ramp-up in years.
Apple has a large order for TSMC
What’s more is that analysts predict that this ramp-up in orders can be attributed to a large order from Apple Inc. (AAPL - Get Report). Credit Suisse analyst Randy Abrams believes Apple Inc. (AAPL - Get Report) will make up for 6.5% of Taiwan Semiconductor Manufacturing Company (TSM - Get Report)’s revenue next year. Daiwa Capital Markets Eric Chen thinks that number will be higher at 10%.
Rumors of Apple Inc. (AAPL - Get Report) and Taiwan Semiconductor Manufacturing Company (TSM - Get Report) joining forces really started circulating in late 2012. Taiwan Economic News explained, “Citigroup Global Markets’ market research fellow, J.T. Hsu, pointed out that Apple Inc. (AAPL - Get Report) began verifying TSMC’s 20nm process in August this year and may begin risk production in November with the process. Volume production is expected to start in the fourth quarter of 2013, raising the possibility that TSMC will hike capital expenditure to US$11-12 billion in 2013 and 2014. Hsu estimated Apple Inc. (AAPL - Get Report) to design quad-core processors into iPad, iTV and even Macbook. iPhones will be still powered by duo-core processors to highlight its low power consumption merit.”
Apple looks to replace SamsungHsu added that Apple Inc. (AAPL - Get Report) first started developing quad-core processors three years ago after they acquired chip maker Intrincity. Just this past September, the Wall Street Journal signed an agreement with TSMC so they would make their chips instead of Samsung Electronics Co., Ltd. (BC94) (00593)0. Apple Insider elaborated, “According to the source, the deal was years in the making, as TSMC was unable to manufacture silicon up to the speed and power standards required by Apple Inc. (AAPL - Get Report). With the technical difficulties solved, the Taiwanese firm will start chip production in 2014. Discussions of a partnership date back to 2010, the Journal says, but in 2011 TSMC was unwilling to accept an offer from Apple Inc. (AAPL - Get Report) to either invest heavily in the firm, or reach an agreement that would dedicate a certain amount of fab space specifically for the production A-series chips.”
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