Three takeouts from the Apple chip report, with one worrying prospect

Bloomberg yesterday reported that Apple has been in discussion with both Intel and Samsung regarding future production of its device processors.

The move is said to be motivated by Apple seeking to reduce its reliance on Taiwan’s TSMC as its sole supplier of A-series and M-series chips …

Apple has of course purchased both iPhone and Mac processors from each of the companies in the past. For a long time, Apple split its A-series chip production between TSMC and Samsung, and Mac CPUs were off-the-shelf Intel ones.

However, TMSC pulled so far ahead of Samsung that it became the only company able to make the most advanced chips for flagship iPhones, and once Apple made the transition to M-series chips for the Mac, TSMC was again the only fabricator able to produce these.

The talks make sense

The first and most obvious takeout is that it makes absolute sense for Apple to engage in discussions with both Samsung and Intel. The company has always preferred to have at least two competing suppliers for all of its key components in order to negotiate the best price and to guard against supply chain disruption.

Additionally, with Taiwan under prolonged threat from China, there is always the danger that TSMC could fall under Chinese control – or that the chipmaker’s plants would be sabotaged or destroyed. Indeed, it was reported back in 2024 that TSMC and its chip machine supplier ASML have made joint plans to remotely disable the machines in the event of an invasion.

Apple absolutely needs to think about a Plan B for these types of scenario.

We shouldn’t expect too much

While both Intel and Samsung are doing everything they can in an attempt to catch up with TSMC, it’s far from clear that either company can do so.

The problem, of course, is that the goalposts are constantly moving. For every advance made by Intel and Samsung, TMSC makes its own advances. There is every possibility that it will remain ahead indefinitely.

At this point, the most likely scenario is that the two companies would only be able to make larger-process chips for the older devices in Apple’s product line-up – similar to the less advanced TSMC equipment installed in the Arizona plants. That would certainly be a useful capability for Apple to have, but it would still leave the company entirely dependent on TSMC for its latest devices.

There is a worrying possibility for Apple customers

One of the issues with Apple having multiple suppliers for key components is that the output from each company may not be absolutely identical.

There have, for example, been cases of displays for Apple products being made by both Samsung and LG, with reported quality differences between the two. Back in 2021, that issue saw LG dropped as a supplier of the LCD iPhone screens used then.

Assuming Intel or Samsung did manage to catch up with TSMC, that would raise the prospect of potential quality differences between supposedly identical chips made by different suppliers. Over on Android, for example, the difference between the supposedly-identical Snapdragon 8 chips made by Samsung and TSMC were so significant that the Taiwanese version was branded as the Snapdragon 8 Plus.

In the worst of cases, this would leave iPhone and Mac buyers seeking to figure out whether the chip in the specific machine they are buying was made by TSMC or one of its competitors.

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