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Samsung Enters 'State of Emergency' as Apple Chooses TSMC as Exclusive A10 Supplier

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Back in early December we posted a report titled "HSBC Analysts Predict TSMC will Gain All of Apple's A10 Chip Business." Two months later and we learn today that the HSBC analysts were correct. It's being reported in Korea today that Taiwan's TSMC has won the battle against Samsung Electronics and will produce the iPhone 7's 10-nano application processors (AP). The news comes by way of semiconductor IP and EDA industries. These sources confirm that Apple has entrusted TSMC with all production of next 10-nano AP called 'A10'. TSMC is planning to enter a state of mass-production starting from June.


A high-ranking executive in EDA industry stated that "TSMC has taken all of Apple's supplies in 10-nano and such plans were already confirmed in second half of last year," which explains why HSBC was so confident in their forecast as we reported.


After encountering such intelligence in second half of last year, Samsung Electronics' System LSI Business Department confirmed that it lost its battle against TSMC. Apple had entrusted TSMC with all of production of 20-nano A8 Chips that were installed in iPhone 6 series, and this hurt Samsung Electronics significantly. Sales of Samsung Electronics' System LSI Business Department had reduced greatly in 2014, and it had made huge amount of loss.


Samsung Electronics, which was grinding its teeth at the fact that it had lost its battle against TSMC, had taken back half of Apple's supplies by quickly establishing mass-production system of 14-nano process."


Now, Samsung Electronics has entered a state of emergency system to prevent declination of rate of operation of factories, claims the report. The report further noted that "It is also important for Samsung Electronics to plan out high-intensity innovations so that it can take back Apple's supplies in 7-nano. But for now, it's all bad news for Samsung and it's going to be hard to be profitable in 2016 without Apple's orders for the A10."


A second Korean report published this morning is claiming that Samsung may dampen the blow of losing Apple's A10 business by gaining more Qualcomm business. Samsung is hoping to gain orders for Qualcomm's Snapdragon 820 chipsets.


The report added that "Samsung plans to beat out TSMC for the Apple logic chip business next year with its seven-nanometer technology. But officials say due to TSMC's latest contract with Apple, it's highly unlikely that Samsung's logic chip business will turn profitable this year."


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