iPhone 7: A10 Chip To Be Made Solely By TSMC: Analysts

iPhone 7: A10 Chip To Be Made Solely By TSMC: Analysts
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Apple’s iPhone 7 is expected to be powered by the anticipated A10 processor, and now a new report indicates that TSMC will singlehandedly fulfill Apple’s A10 processor manufacturing orders.

Big win for TSMC

In a note to investors on Wednesday, HSBC analysts Steven Pelayo and Lionel Lin said that Samsung is the largest manufacturer of A9 chips, producing 60% to 70% of all chips while the remaining 30% to 40% chips are produced by TSMC. TSMC was the major producer of the A8 from 2014, while Samsung, which was the only A-series chip maker formerly, took a backseat.

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According to the rumors, Apple is expected to be the very first customer of TSMC’s Integrated fan-out (InFO) packaging in mass production. With the new technology, it is possible to stack chips on top of each other and mount them directly to a circuit. Now it’s no longer required to mount it first on a substrate. This eventually helps in reducing the thickness and weight of devices.

The analysts expect TSMC to benefit from its InFO deal, adding more than $300 million to 2016 sales, and could reach to $1 billion in revenue in 2017. Production of Apple’s A10 chips will lead to huge revenue for TSMC, somewhere in the range of $2.2 billion to $2.5 billion.

What it means for Apple?

Previously, several reports suggested that TSMC could be the exclusive manufacturer of the so-called A10 chips to be used in the next-generation iPhone. There stands a risk of supply bottlenecks for Apple if TSMC runs into some problems, but at the same time there are technical advantages as well. Samsung, which is the leading smartphone manufacturer in the world, is Apple’s archrival. The move will help Apple lower its dependence on the Korean firm.

Also there are chances that TSMC will be the sole manufacturer of the desktop-class chips used in 12.9-inch tablets as suggested by a recent teardown of the A9X processor that powers the iPad Pro.

On Wednesday, Apple stock closed down 0.9% at $116.28. Year to date, the stock is up by over 5%, while in the last one month, it is down by over 4%. The stock has a 52-week high of $134.54 and a 52-week low of $92.

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