Rumor: Apple Picks Suppliers for Next-Generation Chip

Source: Apple.comIs Apple (NASDAQ:AAPL) already selecting suppliers for its next generation of processors? According to unnamed industry sources cited by the Taiwan-based DigiTimes, three semiconductor product packaging companies will be sharing packaging orders for Apple’s upcoming A8 chip. Amkor Technology (NASDAQ:AMKR) and STATS ChipPAC will each handle 40 percent of the orders, while Advanced Semiconductor Engineering (NYSE:ASX) will provide the remaining 20 percent share of the total packaging orders.

Per DigiTimes’ sources, “Apple’s A8 chip will be a package-on-package (PoP) SoC [system-on-a-chip] solution comprising processors and mobile DRAM [dynamic random-access memory] in a single package.” The new A8 chip is expected to be used for Apple’s upcoming iPad and iPhone iterations. Apple currently uses the A7 chip with 64-bit architecture and M7 motion coprocessor for the iPhone 5S, iPad Air, and iPad mini with Retina display. However, the iPhone 5C still uses the older A6 chip.

DigiTimes’ unnamed sources also indicated that Taiwan Semiconductor Manufacturing Company (NYSE:TSM) has already secured foundry orders from Apple for the A8 chip. “TSMC reportedly will start ramping up production using 20nm process technology for Apple’s A8 chip in the second quarter of 2014,” said the sources via DigiTimes. It should be noted that DigiTimes has a history of hit-or-miss industry predictions.

Last month, DigiTimes claimed that Taiwan Semiconductor Manufacturing Company would share responsibility with Samsung (SSNLF.PK) for the production of Apple’s processors. “Samsung will use its 14nm FinFET process to manufacture a portion of the A-series chips for Apple’s 2015 iPhone series, and the remainder of the chips will be built using TSMC’s 16nm FinFET technology,” stated DigiTimes’ sources. “TSMC should land 60-70 percent of Apple’s total 14/16nm chip orders, with the remaining 30-40 percent to be taken over by Samsung.”

Some industry watchers speculated that Apple’s latest flagship smartphone would use a processor manufactured exclusively by Taiwan Semiconductor Manufacturing Company. However, a teardown of the iPhone 5S revealed that Apple’s A7 chip was still being manufactured by Samsung. Samsung also manufactures many of Apple’s A6 chips at its fab in Austin, Texas. However, Apple has been rumored to be moving towards reducing its reliance on rival smartphone maker Samsung by shifting more of its chip production to other manufacturers.

Recently released data from market research firm Gartner revealed that Samsung and Apple were the top semiconductor buyers in 2013. According to Gartner’s data, Samsung consumed over $30 billion of semiconductors in 2013, while Apple consumed approximately $23 billion. Together, the two companies accounted for 17 percent of the total semiconductor demand last year.

Here’s how Apple has  traded over the past five sessions.

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