Apple Gives Orders Processing Chips to TSMC, WSJ Says

Taiwan Semiconductor Manufacturing Co. (2330) got orders from Apple Inc. (AAPL) for processing chips used in its iPhones and iPads, the Wall Street Journal reported, citing an unidentified company official.

The move is part of Apple’s shift away from relying on Samsung Electronics Co. (005930) for components with the new chips to be made from next year, the newspaper reported. Elizabeth Sun, a spokeswoman for Hsinchu, Taiwan-based TSMC, declined to comment on the report. A call to Takashi Takebayashi, a Tokyo-based spokesman for Apple, wasn’t immediately returned.

Apple has expanded its list of suppliers and reduced its dependence on Samsung as the world’s two biggest smartphone makers each score court victories in patent disputes spread over four continents. The companies are competing for dominance of a global mobile-device market estimated by researcher Yankee Group at $346 billion in 2012.

TSMC, the world’s largest contract manufacturer of chips, in April forecast record quarterly sales and raised its spending plan amid rising smartphone demand. Chairman Morris Chang, whose company gets $7 for every smartphone sold worldwide, raised his capital expenditure plan by as much as 10 percent as TSMC seeks to buy more equipment to meet demand for newer manufacturing technology.

Cupertino, California-based Apple will outsource as much as 50 percent of its application processor wafers to TSMC in the next two years, Goldman Sachs Group Inc. analysts led by Donald Lu wrote in a report on May 6.

Suwon, South Korea-based Samsung, which also supplies screens for Apple devices, accounts for about 1.9 percent of supplies to Apple, according to data compiled by Bloomberg.

The company will remain the primary supplier of chips to Apple until next year, the newspaper reported.

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

To contact the editor responsible for this story: Robert Fenner at rfenner@bloomberg.net

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