With Apple seeking to lessen its dependency on Samsung as a processor supplier, a number of chip-supplier scenarios are emerging for Apple's next generation of devices.
Amid serious legal squabbling with Samsung, Taiwan Semiconductor Manufacturing Company (TSMC) is likely to be the first to capture Apple's new business. But Intel, which already makes all of Apple's desktop and laptop processors, is also in the running for other devices.
TSMC scenario: TSMC may first appear, in the fourth quarter, as a second-source supplier of the A5 processor, according to Gus Richard, an analyst at Piper Jaffray, who wrote about this in a research note last month and still maintains this outlook. The A5 chip is currently used in the iPad 2.
Then TSMC would take on the next-gen A6. Linley Gwennap, who heads the Linley Group, a chip consulting firm, believes the A6 will be a quad-core processor. Problem is, a quad-core chip is overkill for a phone, Gwennap said.
"Thus, Apple may need to develop a second processor, probably a 28 [nanometer] shrink of the A5, for the iPhone and iPod Touch in 2012," Gwennap wrote in a research note last month. Apple's A5 is currently made on a "fatter" 45-nanometer process by Samsung. Generally, the smaller the chip geometry, the faster and/or more power efficient the chip is.
So, how might Apple divvy up A5 and A6 production? "It is difficult to dual-source a chip these days, so I'm thinking that Samsung will make all 45nm A5 processors and TSMC will make all A6 processors. The A5 shrink could be TSMC as well, but this is all speculation at this point," Gwennap said in response to an e-mail query today.
The Intel scenario: Intel is pursuing future chip business at Apple aggressively, according to Piper Jaffray's Richard. "Intel's weakness is its SoC [system-on-a-chip] design capability which lags the rest of the industry as much as its manufacturing leads," Richards wrote. But "Apple needs to maintain control of its microprocessor architecture and software to differentiate its products, protect its IP [intellectual property] and slow copy cats. Based on these assumptions, we think Apple and Intel could benefit by working together," he wrote.
But what Intel would make is unclear. A special system-on-a-chip for a newfangled Apple device? Or more of a straight-forward contract manufacturing--so-called foundry--relationship?
Other scenarios: Gwennap believes Apple may have to get a "third-party" processor for some of its future products. "Either to develop low-cost iPhones or to reduce the burden of developing a broad line of processors," he wrote. "Qualcomm is already shipping cellular-baseband chips into Apple's newest products and would be a logical supplier if Apple were to adopt integrated processors," he wrote, adding that it will be impossible to know, however, until the products actually ship because of Apple's secrecy.
In the end, what many observers tend to miss is that designing a chip is a Herculean task, even for a tech-savvy, resource-rich company like Apple, according to Gwennap. "Apple's decision to develop its own processors is paying dividends, but the company is discovering how difficult it is to be a processor supplier," Gwennap wrote.