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Apple Entering Processor Fabrication Business ~ However, Not so Fast ~ Asian News Sources say Samsung To Supply A9 Processors For iPhone 7

July 15, 2013

โ€ข Apple Enters the Processor Fabrication Business, Good By to Samsung and TSMC. Apple has just done something that SemiAccurate has been expecting for months, Apple has entered the fab industry. Apple just bought into a fab, and not in a trivial way either. OK, Apple may be entering Processor Fabrication Business; However, Not so Fast, sources say Samsung is to supply A9 Processors for iPhone 7.

โ€ข Aside from this Chip Fab story-line, notice how long into the future Apple has to plan its Future iPhones. Bringing a new iPhone iteration is not a simple “click of the fingers.” These very complex micro-computing communications devices, called Smart Phones, requires years of engineering and testing, before fabrication of the components.

โ€ข Apple has been upping the ante on their silicon design capabilities faster than anyone anticipated, with impressive results. The end point was known, the steps to get there were understood, but the exact cadence of progress was only conjecture until a few recent steps made things much clearer.

โ€ข As stated almost two years ago, Apple is pretty hell-bent on making their own mainstream CPU, top to bottom. Given the magnitude of that task, how on earth were they going to get there? Pundits are fond of pointing out hires, and pointing out how a single person is going to change everything, a laughable notion. What few seem to do is putting all the pieces together to see a bigger picture.

โ€ข Samsung To Supply A9 Processors For iPhone 7. Samsung Electronics has reached a deal with Apple to supply A9 processors for the iPhone 7 from 2015, The Korea Economic Daily reports. Samsung has been producing Appleโ€™s mobile processors since the iPhone first launched in 2007, but recent rumors have claimed the Cupertino company has been looking to take its business elsewhere.

โ€ข Apple and Samsung have been embroiled in countless legal battles in courtrooms all over the world, and Apple has reportedly been seeking other component suppliers since Samsung was found guilty of infringing its iPhone patents last August. The company is now sourcing its iPhone 5 flash storage from Toshiba, and its iPad mini displays from LG.

โ€ข Recent reports have also claimed that Apple will use TSMC for some of its processor supplies in 2014, but Samsung will still supply the bulk of its orders. And it appears this will be the case in 2015, too, as Samsung begins producing Appleโ€™s 14-nanometer A9 chips for the iPhone 7.

โ€ข Aside from who is going to fabricate the chips news, an interesting side-bar, is that a 14-nanoMeter Chip is very thin indeed; last year 28-nM chips were commonplace. Generally very thin Chip-sets require much less power to run, generate less heat, saving battery power.

โ€ข According to The Korea Economic Daily, Samsung developed its โ€œstate-of-the-artโ€ 14-nanometer chips ahead of TSMC, which is why it secured Appleโ€™s business. Itโ€™s also thought that TSMC may struggle to produce all the chips Apple needs for its hugely popular iOS devices on its own.

โ€ข The iPhone 7 will launch during the second half of 2015, according to The Korea Economic Daily, though this is when weโ€™d expect to see the iPhone 6S.

โ€ข So if Apple really bought into a fab, as the exclusive story alleges, the non-trivial move would span years to complete and potentially cost the firm billions of dollars. Worse, Apple would expose itself to unforeseen difficulties not limited to yield issues: running a sophisticated chip-making factory requires a disciplined approach to attracting and retaining highly-trained engineers, one analyst cautioned Mondayโ€ฆ

โ€ข According to Piper Jaffrayโ€™s resident Apple analyst Gene Munster (via AppleInsider), Apple would be better served focusing on chip process development rather than the actual fabrication. Focusing on an Apple own Chip Development facility for the cutting-edge 10-nanometer silicon process would come with a $2 billion price tag attached to it.

โ€ข But should Apple build its own full-fledged Chip-Foundry Facility, the company would need to cough up at least $7 billion, Munster noted. As a result, Munster believes it would be in Appleโ€™s best interest to develop its own logic process technology rather than buying a factory. He also believes Apple could license its own custom process to a variety of foundries to keep costs down, but that sounds very unlike-Apple.

โ€ข Recall, the first iPhones had a Samsung SoCs in them. They werenโ€™t exactly bleeding edge, and Apple did little more than pick a few pieces and order up the count of various portions, picked clocks, and added the feature here and there. It was not exactly a tour de force of their silicon might, but few companies can do even that much. Then came the next generation, and lo and behold, there were a few Samsung cores, Imagination GPUs, and the rest came from Cupertino. Apple did large swathes of the uncore themselves, at the time an unexpected move. Progress, massive progress, but everyone cares about the cores and GPU, so no one seemed to notice that Apple did the trickiest parts of the SoC in house.

โ€ข The next generation or two, depending on how you count, was just more cores, more GPU, and nothing really recognizable from the outside. World class chips, world class performance, and pretty amazing power numbers somehow didnโ€™t get peopleโ€™s attention. We blame the state of the press for not seeing what was in front of them, but the changes were there, and the tech was impressive. Because it didnโ€™t involve cores or shader count, no one gave them a second look.

โ€ข Then came the A6 line, the most recent chips. No A9 core this time, it was a somewhat unexpected A15 ISA core. More unexpected was that it wasnโ€™t a vanilla ARM licensed A15 core either, it was a full blown custom core. No one other than Anand seemed to notice through the reality distortion field that Tim Cook seems to have finally got tuned back up, but Apple made their own core, top to bottom. Headline count? Woefully low. Pointless stories about the finish of the case? 7-8 orders of magnitude higher. That is progress.

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