Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday declined to comment on mounting speculation that the company was close to securing orders from Apple Inc to produce next----generation A6 chips used in the latest iPhones and iPads.
Speculation has increased recently that TSMC might replace Samsung Electronics Co as Apple’s new supplier for its ARM-based A5 chips and next-generation A6 chips.
“We have no comment on this report or any rumors,” TSMC spokesperson Elizabeth Sun (孫又文) said by telephone. “It is our policy not to comment on existing customers or potential customers.”
Her remarks came after Reuters quoted sources as saying yesterday that TSMC has started trial manufacturing of A6 chips for Apple.
“Whether TSMC would get actual orders for the chips would depend on its yield rate or the amount of chips per batch that come out with no defects,” the sources told Reuters.
Sun on April 28 said TSMC was technologically capable of -manufacturing A5 chips, but could not comment at the time whether TSMC had secured A5 chip orders from Apple.
The Reuters report said TSMC is an obvious candidate to win orders from Apple as the Taiwanese firm has budgeted US$7.8 billion in capital spending this year for technology upgrades and capacity expansion. TSMC also boasts experience with the mobile chip’s architecture developed by British chip designer ARM Holdings PLC, it added.
However, the potential obstacles for Apple to shift its chip supplier to TSMC from Samsung include “patents and chip design issues as well as a push by Samsung to retain the business,” the report said.
However, the issue may sound alarm bells for Samsung as it and Apple have been engaged in a series of patent lawsuits against each other with the US International Trade Commission in Washington since April. It also comes as the South Korean company has begun to emerge as a strong competitor to Apple in the smartphone and tablet businesses.
Samsung Securities analyst Warren Lau (劉華仁) said he doubted whether TSMC would be able to land orders from Apple that easily and he said the brokerage had tried to avoid setting -unrealistic expectations for its clients.
“We think some investors’ anticipation for the production commencement of A5 in the fourth quarter of 2011 could be unrealistic. Instead, we believe the A6 design is likely to start qualification in the fourth quarter with volume production likely to begin in mid-2012 at the earliest,” Lau said in a report issued on Thursday.
In the report, Lau said maintaining good prices and better operating margins could pose a challenge to TSMC if it were to secure the Apple orders. Moreover, Samsung has held significant patents of A4 and A5 chips, among other factors in favor of Samsung, according to the report.
Lau cut his forecast for TSMC’s net profit forecast by 9 percent for this year to NT$136.02 billion (US$4.71 billion) and trimmed 14.4 percent for next year to NT$142.48 billion.
“Typical seasonality calls for sequential revenue growth of 10 to 15 percent quarter-on-quarter in the third quarter, but this is unlikely to materialize in 2011,” Lau said.
He attributed the softening outlook to the deterioration of the macro environment, inventory digestion and market share shifts among TSMC customers.
Lau reiterated a sell rating on TSMC and retained the target price of NT$60 unchanged.
TSMC shares tumbled 1.13 percent to NT$69.9 yesterday, hitting their lowest level since April 20.
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