Three takeaways from the Apple chip report, with a worrying outlook

Bloomberg reported yesterday that Apple is in discussions with Intel and Samsung regarding future production of its device processors.

This decision would be motivated by the fact that Apple seeks to reduce its dependence on Taiwanese TSMC as the sole supplier of A and M series chips…

Apple has of course purchased iPhone and Mac processors from each company in the past. For a long time, Apple shared production of its A-series chips between TSMC and Samsung, and Mac processors were commercially available Intel processors.

However, TMSC got so far ahead of Samsung that it became the only company capable of making the most advanced chips for flagship iPhones, and once Apple transitioned to M-series chips for Macs, TSMC was again the only manufacturer capable of producing them.

Discussions make sense

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

Additionally, while Taiwan is under prolonged threat from China, there is still a risk that TSMC could fall under Chinese control – or that the chipmaker’s factories could be sabotaged or destroyed. Indeed, it was reported in 2024 that TSMC and its chip machine supplier ASML had developed joint plans to remotely disable the machines in the event of an invasion.

Apple absolutely needs to think about a plan B for this type of scenario.

You shouldn’t expect too much

Although Intel and Samsung are doing everything they can to try to catch up with TSMC, it’s far from clear that either company can do it.

The problem, of course, is that the goals are constantly in motion. For every advance made by Intel and Samsung, TMSC makes its own advances. It is very likely that it will remain in the lead indefinitely.

At this point, the most likely scenario is that the two companies would only be able to make higher-process chips for older devices in Apple’s product line – similar to the less advanced TSMC equipment installed in Arizona factories. This would certainly be a useful feature for Apple, 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 problems with Apple having multiple suppliers for key components is that each company’s production may not be absolutely identical.

There have been, for example, cases of displays for Apple products manufactured by both Samsung and LG, with reported quality differences between the two. In 2021, this issue saw LG dropped as the supplier of the then-used iPhone LCD screens.

Assuming Intel or Samsung did Managing to catch up with TSMC would raise the prospect of potential quality differences between supposedly identical chips made by different suppliers. On Android, for example, the difference between the supposedly identical Snapdragon 8 chips made by Samsung and TSMC was so great that the Taiwanese version was named Snapdragon 8 Plus.

In a worst-case scenario, iPhone and Mac buyers would wonder whether the chip in the specific machine they’re buying was made by TSMC or one of its competitors.