Report: Apple squeezing Samsung and TSMC for last-minute price cuts on A9 chips

A9

A new report suggests that Apple is playing A9 chip makers Samsung and TSMC against one another in the lead up to the launch of new iPhones, attempting to extract last-minute price reductions for its next-generation processors. According to the report from Digitimes, which has a mixed track record regarding upcoming Apple products, Apple is requesting lower prices from both companies. Though TSMC is “inclined to refuse,” Samsung has agreed to discount the chips, offering Apple “almost-free backend services” in an effort to “grab the majority of A9 chip orders.”

The report suggests that Apple is leveraging the novelty of the FinFET chip manufacturing process to extract concessions from TSMC, which has relatively few FinFET chip orders from other customers. A claimed reduction in Apple’s demand from 30,000 wafers per month to under 20,000 wafers would leave TSMC to make up a significant difference between Apple’s original order and the Taiwanese company’s FinFET production capacity. The impact on Apple’s upcoming A9X, which was believed to be handled by TSMC, is unclear…

Prior reports have indicated that Samsung and TSMC were both pushing hard for Apple’s A9 business, each developing FinFET production processes capable of turning out smaller, more powerful, and more energy-efficient chips. At one point, Samsung appeared to be ready to serve as Apple’s exclusive A9 supplier, but subsequent reports noted that TSMC would also supply processors to Apple.

Reports claimed that TSMC will handle all production of the A9X chip intended for iPads, historically a more powerful but lower-volume component than Apple’s non-X processor. It’s unclear whether the A9X will be impacted by the price negotiations.

FTC: We use income earning auto affiliate links. More.

You’re reading 9to5Mac — experts who break news about Apple and its surrounding ecosystem, day after day. Be sure to check out our homepage for all the latest news, and follow 9to5Mac on Twitter, Facebook, and LinkedIn to stay in the loop. Don’t know where to start? Check out our exclusive stories, reviews, how-tos, and subscribe to our YouTube channel

Comments

  1. Cory © (@Nardes) - 7 years ago

    Possibly a trickle down of phone carriers no longer offering subsidized phones? I think they might lose some customers that come in and see that they could save $10+ a month per phone if they switch to Android for a phone that’s has “same” features.

    • rettun1 - 7 years ago

      People who don’t know a lot about phones and already have an iPhone usually don’t switch over, and the same goes for those people who have an android phone instead.

      • Matt Byers - 7 years ago

        I don’t think people will switch as much as they may wait or not buy the 6s instead opt for the 6 etc. Apple needs to keep the upgrade cycle going so they may have to reduce the price.

  2. Matt Byers - 7 years ago

    next iphone unlocked for 599???

    • Rich Davis (@RichDavis9) - 7 years ago

      I don’t know if they are going to drop the MSRP for the next iPhone 6 replacement. They’ll bring a version of the iPhone 6 down probably by $100 for an unlocked iPhone 6, which is what they typically do each year. so the iPhone 6 will be priced where the iPhone 5S is currently priced. I don’t know if they can bring the costs down enough to lower the MSRP yet. The new Force Touch screens are probably pretty pricey, as well as the new A9 processors and the new camera. It think it’s going to be a few more years until they think about lowering the MSRP of their flagship products.

  3. RP - 7 years ago

    I would guess it says Apple is unhappy with what TSMC has delivered. Not up to snuff? I know I would demand a price break for something I was unhappy with.

    • C Yang (@chyang888) - 7 years ago

      Using your logic. Since Apple has also demand the same price discount from Samsung, it would mean that Apple is ALSO UNHAPPY with what Samsung has delivered. The fact that Samsung agreed to the price cut means that they also know what their product is really crappy so they have no leverage, so they have no option but giving.

      On the other hand, TSMC, knowing that what they are delivering is superior and Samsung’s crappy yield would not be able to supply enough components to Apple, TSMC is not going to lower the price – because they know Apple won’t be able to get enough quality parts from Samsung and will be forced to buy from TSMC at the previously agreed price.

  4. jamdox - 7 years ago

    They’re probably trying to screw nvidia over their patent trolling

  5. C Yang (@chyang888) - 7 years ago

    Even at a reduction from 30,000 to 20,000 wafers per month, You know how 20,000 wafer mans? This translates into 25-30 Million A9 chips per month. This data shows TSMC is not the 2nd supply.

    If Apple is trying to cut cost, it would possibly mean for forecast for demand for iPhone6S is lower than before based on current business climate.

    This won’t really hurt TSMC because TSMC already supply majority of chips to Apple – including all A8s, some A9s, audio chips, apple force touch sensors. Possibly the NXP co-processors, GPS chip are also made by TSMC. In any typical iPhone probably 70% of the chips inside is made by TSMC.