①According to media reports on Tuesday, Apple has held exploratory discussions with Intel and Samsung Electronics regarding the production of main processors for its devices; ②This move comes as the iPhone manufacturer seeks to diversify its supply chain beyond its long-term partner, Taiwan Semiconductor; ③The recent chip shortage has highlighted, to some extent, Apple's need to consider alternative suppliers.
Cailian Press reported on May 5 (edited by Bian Chun) that, according to media citing insiders on Tuesday, Apple has held exploratory discussions with Intel and Samsung Electronics regarding the production of main processors for its devices.
The report noted that this move comes as the iPhone manufacturer seeks to diversify its supply chain beyond its long-term partner, Taiwan Semiconductor.
According to insiders, Apple has held preliminary talks with Intel regarding the use of the company’s chip foundry services. Meanwhile, Apple executives have also visited an advanced chip factory being built by Samsung in Texas.
The report stated that the discussions are still in their early stages, reflecting Apple’s efforts to reduce its reliance on a single supplier for custom chips. These custom chips power iPhones, iPads, and Mac computers.
However, insiders also indicated that Apple has concerns about using technology other than that of Taiwan Semiconductor due to worries about reliability and scale, which might ultimately prevent it from partnering with other firms.
The report also mentioned that any shift would mark a significant change in Apple’s supply chain strategy, though no final decision has been made yet.
For more than a decade, Apple has designed its own core processors (i.e., system-on-chip) that power its devices and commissioned Taiwan Semiconductor to manufacture them using world-leading production processes. The latest iPhones and Mac computers both utilize a 3-nanometer process technology.
Nevertheless, even as one of the largest chip buyers, Apple is not immune to supply chain disruptions. The root cause of the recent chip shortage lies in the large-scale construction of artificial intelligence data centers and unexpectedly high demand for Mac computers suitable for running AI models locally. This, to some extent, underscores the necessity for Apple to consider alternative suppliers.
When Apple announced its earnings last month, it warned of ongoing constraints in chip supply. The company’s CEO, Tim Cook, stated that sales of products such as the iPhone in the previous quarter were constrained by tight supplies of advanced processor chips, which are at the core of its devices. He noted at the time, “We don’t have as much flexibility in the supply chain as we normally do.”
However, finding alternative suppliers is no easy task. Intel and Samsung are currently unable to reliably provide the production capacity and scale that have made Taiwan Semiconductor the world's leading custom chip foundry and one of Apple's most important supply chain partners.
For Intel, securing external customers for its foundry business is a critical component of its revival plan under CEO Lip-Bu Tan. After past failed attempts, the company is in the early stages of acquiring clients for its foundry operations. Securing Apple as a customer would represent a major victory for Lip-Bu Tan and help attract more new business.
Samsung has been relatively more successful than Intel in the foundry sector but still struggles to keep up with Taiwan Semiconductor, remaining far behind in the foundry market. Endorsement from Apple would significantly benefit Samsung, despite the company's competitive relationship with Apple in areas such as smartphones.