Apple is in talks with Intel and Samsung Electronics to entrust them with the manufacturing of so-called systems-on-a-chip, the most important processors contained in its devices. According to sources from Bloomberg, however, these are informal talks: no orders have been placed yet and Apple could also decide to drop the idea and continue relying exclusively on its trusted supplier, the Taiwanese company Tsmc, the largest and most sophisticated contract microchip manufacturer in the world.
The Cupertino tech company is in a delicate position: on one hand, it needs to protect itself from possible supply disruptions and therefore must reduce its dependence – currently deep – on Tsmc; on the other hand, it is objectively difficult to find suppliers capable of matching the reliability of the Taiwanese company.
FOCUS ON SUPPLY SECURITY AND THE PROBLEM WITH TSMC
For over ten years Apple has been designing the systems-on-a-chip it uses in iPhones and Macs itself, but relies on Tsmc for their manufacturing. The most advanced manufacturing lines of this company are located in Taiwan, a potentially critical area: China, in fact, does not consider Taiwan a separate country but a province of its own territory and wants to control it even by force.
Apple is generally very attentive to supply security and the resilience of its supply chain to external shocks: for example, it tends to have at least two different suppliers for each of the main components of its devices, such as screens. To reduce exposure to Taiwan, it is therefore collaborating with Tsmc on expanding its factory in Phoenix, United States, with the goal of reaching an output of one hundred million microchips by this year. Even if it manages to meet the goal, however, it would still not be a sufficient volume to satisfy a significant portion of its needs.
WHAT APPLE CAN DO WITH INTEL AND SAMSUNG
If Apple – also due to competition from the artificial intelligence sector, which requires huge computing power – fails to source sufficient quantities of processors for its iPhones and Macs, its financial results would suffer. The problem, as mentioned, is that it is difficult to replace Tsmc and neither Intel nor Samsung can guarantee the same levels of technological quality and production scale.
As for Intel, the company is no longer what it once was: in recent years it has failed to evolve its manufacturing technologies or ride the wave of artificial intelligence; the survival of its manufacturing division is still at risk and it is thought it cannot continue without a contract with a major client.
If Apple were to actually decide to rekindle the relationship with Intel – which from 2006 to 2020 designed and supplied processors for Macs – it could also see an improvement in its relationship with the US government, which has invested 9 billion dollars in the company.
– For further reading: After Nvidia and the government, will Apple also participate in Intel’s rescue?
As for Samsung, although it is in a better position than Intel, it still does not possess manufacturing capabilities comparable to those of Tsmc.
