Rumor: Apple Buys Taiwan Fab to Build Its Own Chips

Despite all that talk that Apple is striking a deal with Taiwan Semiconductor Manufacturing Company Limited (TSMC) to produce the A8 chips and later, there's now a rumor that the fruity iPhone maker will make its own chips, thus entering the fab industry thanks to a purchase of an unnamed chip fabricator. There's speculation that Taiwan-based chipmaker United Microelectronics Corporation (UMC) was Apple's purchase of choice.

For years Samsung has been the sole builder of SoCs for Apple's line of devices including the iPhone, iPad, iPod Touch and Apple TV. But as bitterness continues to build between the two companies in their patent war spread out across the globe, and the rising competition between the two in the smartphone and tablet sectors, reports have surfaced that Apple is looking to be less reliant on Samsung and use another fab to produce its chips.

In June, unnamed sources claimed that TSMC and its IC design service partner Global UniChip secured a three-year agreement with Apple to supply foundry services for the next A-Series chips using 20 nm, 16 nm and 10 nm process nodes. Sources said TSMC began producing Apple's A8 chip in small volumes in June, and will ramp up its 20 nm production capacity after December 2013. TSMC is expected to install a batch of new 20 nm fab equipment -- capable of processing 50,000 wafers -- in 1Q14.

Hints of TSMC's involvement with A-Series manufacturing surfaced back in January, indicating that Apple was sampling TSMC as a foundry with a trial production of its A6X SoC. Then in April, The Korea Times said that Samsung will not be a part of the A7 chip either. One of Samsung’s local partners in Korea told the paper that Apple was sharing confidential A7 info with TSMC.

TSMC is expected to produce Apple's A9 and A9X starting around the end of 3Q14. These will be used in next-gen iPhone and iPad products for 2015 whereas the A8 will be used for an iPhone slated to launch in early 2014.

That said, Apple's foundry purchase makes sense. Not only will the fruity company not need to solely rely on other sources to produce its chips, but offer foundry services to other companies, making a little extra cash on the side. An iOS-dedicated chip manufactured by Apple may not begin until A10 as it is given the supposed deal with TSMC, and if the roadmap generated by previous reports hold true, the A10 won't see the light of day until 2016. That's speculation, of course.

Although United Microelectronics Corporation trades on the New York Stock Exchange, it's based out of Taiwan, so any hopes that Apple will provide Americans with new jobs in a fab facility is out the door. The company was founded in 1980 as a spin-off of Taiwan's government-sponsored Industrial Technology Research Institute. It's reportedly second only to TSMC, and has ten manufacturing facilities spread out across Taiwan, Singapore and China.

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