Apple and TSMC to Expand Foundry Ties

Apple and TSMC seems to have entered into an agreement to strengthen their foundry ties, so that, presumably, Apple could move away from using Samsung's fabs for manufacturing their A5 processors that are used inside the recently launched iPad 2 tablet.

According to sources cited by the EETimes publication, the new foundry relationship was kept on the low by the two companies, but Apple plans to use TSMC's 40nm manufacturing process for building its ARM-based A5 mobile SoC.

In addition, “Apple will also work with TSMC on 28-nm,” say the same sources.

Right now, the A4 processors that are used by the Cupertino-based company for the iPhone 4 and the original iPad are manufactured by Samsung.

As the sources cited report, one of the most important reasons why Apple has decided to part ways with Samsung has to do with the fact that the Korean company is one of its most important competitors in the smartphone and tablet markets.

Furthermore, TSMC is said to have the highest yielding 40nm process in the foundry world (hard to believe if we take a look back at the availability of AMD's HD 5000 GPU family) as well as the largest 40nm production capacity.

If this report turns out to be accurate, this could come as a huge blow for Samsung that wants to expand its foundry business in order to compete with the likes of TSMC or Globalfoundries.

To get a sense of how big of a business the iPad production really is, FBR says that about 2 million iPad 2 tables are going to be built in the first quarter of 2011.

More importantly, for the second quarter of the year, FBR expects that about 7.2 million iPad devices will be manufactured, and almost all of those will be iPad 2's.