Apple and Samsung have been asymmetric competitors for years, fighting to grab smartphone market share and partnering when it comes to chips. According to a recent report from The Electronic Times, TSMC (the Taiwan Semiconductor Manufacturing Company) will be the only company manufacturing the A10 for the next iPhone. Samsung won’t be working with Apple for the next iPhone.
This isn’t an overnight change as Apple has already been working with TSMC in the past. The A9 chips in the iPhone 6s and 6s Plus are currently manufactured by both TSMC and Samsung. Before that, TSMC was the sole supplier of the A8 for the iPhone 6 and 6 Plus.
Using multiple manufacturing partners provide different advantages. First, it’s a good way to make sure that you won’t have any supply shortage. Given that Apple sells tens of millions of iPhones per quarter, it’s unclear whether Samsung alone or TSMC alone can manufacture enough chips for all these phones. Samsung and TSMC also manufacture chips for other phones as well.
Second, negotiating with multiple companies lets you get better prices. It’s unclear whether Samsung is more expensive than TSMC, but Apple can drive the prices down as the A10 represents a huge contract.
Finally, Apple can pick the most efficient design. TSMC’s A9 was slightly better when it comes to battery life. So Apple might favor TSMC for this reason as well.
According to The Electronic Times, TSMC should start production of the A10 in June ahead of the iPhone 7 release this Fall. It could feature a 10nm design. We’ll have to wait for an iPhone 7 teardown to learn more about the A10.
For the end customer, it doesn’t change much if your iPhone chip is manufactured by TSMC or Samsung. Both companies implement Apple’s own CPU design. But Samsung’s chip business could take a hit from this failed contract.