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TSMC rejected billions from Apple and Qualcomm for exclusive access

Wants to remain neutral
Wed Aug 29 2012, 14:40

FAB FOR HIRE TSMC rebuffed offers from Apple and Qualcomm for exclusive access to its production capacity.

TSMC cuts wafers for just about every chip designer of note including AMD, Broadcom, Nvidia and Qualcomm, but according to Bloomberg both Apple and Qualcomm offered more than $1bn for exclusive access to some of its production capacity. TSMC rebuffed the offers claiming it can internally fund the expansion in capacity needed to serve the chip design outfits.

Apple relies heavily on Samsung to fab its system-on-chip designs used in the Iphone and Ipad. With the two firms waging a bitter legal battle, it is no surprise that Apple wants to have an alternative source in case Samsung decides to pull the plug in the ultimate retaliatory move.

Qualcomm has been hit particularly hard by TSMC's 28nm process node not delivering the chip yield it needs to meet demand. Such was Qualcomm's annoyance at TSMC, it publicly said that it would look elsewhere to supplement its supply chain.

TSMC's rejection of multi-billion dollar offers from Apple and Qualcomm is not surprising given that it too wants to keep its options open. Given the firm's inability to meet demand, TSMC isn't suffering from a shortage of business and, should it favour one company over another, that could lead to other customers looking elsewhere.

According to Lora Ho, CFO of TSMC, the firm is not even willing to allocate a fab to a single vendor and said, "You have to be careful. Once that product migrates, what are we going to do with that dedicated fab? We would like to keep the flexibility."

If TSMC can fund expansion so it can provide the capacity required to keep its customers happy then avoiding Apple's and Qualcomm's billions could leave it in a good position, as the number of fabs is likely to dwindle further. µ


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