Next iPhone Be Fabricated at TSMC

The article below discuss Apple fabricating 30% of A9 at TSCM fab. A9 is the microprocessor running the next iPhone.








More about Apple fabrication at Samsung and TSCM from October 2012 Apple Cutting Out Samsung Chips

Ron
Insightful, timely, and accurate semiconductor consulting.

Semiconductor information and news at - http://www.maltiel-consulting.com/

Apple makes 'last-minute decision' to use TSMC for 30% of 'A9' chip orders for next iPhone

By Neil Hughes
Wednesday, April 15, 2015, 06:21 pm PT (09:21 pm ET)

Facing poor yield rates from chipmaker GlobalFoundries, Apple has apparently made an eleventh-hour call as it solidifies its supply chain for the next-generation iPhone, opting to award nearly a third of "A9" chip orders to Taiwan Semiconductor Manufacturing Co.

Well-connected analyst Ming-Chi Kuo of KGI Securities issued a note to investors on Wednesday, a copy of which was obtained by AppleInsider, revealing that Apple has apparently made what he called a "last-minute decision to recruit TSMC." Apple is said to have called an audible after partner GlobalFoundries continued to experience poor yield rates on production of the next-generation CPU.

Specifically, GlobalFoundries' "A9" chip yield rate is said to currently be at about 30 percent yield rate, which is well below what Kuo said is a mass-production "basic requirement" of 50 percent.
Apple is said to have turned to TSMC after partner GlobalFoundries showed exceptionally poor "A9" chip yield rates of around 30%.
"Recruiting TSMC reduces supply uncertainties for Apple," the analyst said.

Another factor in the decision, according to Kuo, are concerns from Apple that Samsung's chipmaking business may not be able to supply enough of its 14-nanometer design. That's because initial sales of the Galaxy S6 and S6 Edge have apparently been greater than expected, and may pull 14-nanometer orders away from Apple.

Finally, Kuo also indicated that TSMC's competing 16-nanometer FinFET Turbo design has exceeded Apple's expectations in both yield rate and performance.

Another industry analyst said much the same in a report last month. Citing a recent trip to Asia, Timothy Arcuri from Cowen and Company said strong yields and attractive pricing led him to believe that TSMC had secured a large portion of Apple's A9 order. 

Apple's 2015 iPhone update is widely expected to sport a next-generation processor based on a smaller and more efficient design. Multiple reports have indicated that Samsung will build the majority of "A9" processors for Apple's next-generation iPhone. 

Samsung had a stranglehold on Apple's mobile processor business, building all units for the iPhone until last year. That's when TSMC began contributing chips for the iPhone 6 and iPhone 6 Plus, using a 20-nanometer process for the A8 processor that powers Apple's flagship handsets.

DRAM Market Consolidation=> 32% Growth, All Time High Revenue

6+ DRAM vendors in 2001

Worldwide semiconductor revenue grew 7.9% in 2014, led by DRAM 32% increases;

"memory market was the best performer for the second year in a row, growing 16.6 percent, meaning the rest of the market only achieved 4.9 percent growth," said Andrew Norwood, research vice president at Gartner. "As a group, DRAM vendors performed best, lifted by the booming DRAM market, which saw revenue increase 32 percent to $46.1 billion, surpassing the all-time high of $41.8 billion set in 1995." (more in the article below).  

The consolidation in the number of memory manufacturers from 20+ in the early 90s to 3 vendors help to firm DRAM memory chip price. Due to the limited number of vendors and the high cost of new fabs will keep the floor under DRAM chip costs in the future.

More about fab consolidation in my blog from March 2012 – Moore's Law End? (Next semiconductors gen. cost $10 billion)

DRAM vendors market shares are at S. Korea's share in DRAM market hits all-time high in 2014

Ron
Insightful, timely, and accurate semiconductor consulting.

Semiconductor information and news at - http://www.maltiel-consulting.com/

Worldwide Semiconductor Revenue Grew 7.9 Percent in 2014, According to Final Results by Gartner

Booming DRAM Market Sees Revenue Increase 32 Percent During 2014

Worldwide semiconductor revenue totaled $340.3 billion in 2014, a 7.9 percent increase from 2013 revenue of $315.4 billion, according to final results by Gartner, Inc. The top 25 semiconductor vendors' combined revenue increased 11.7 percent, which was more than the overall industry's growth. The top 25 vendors accounted for 72.4 percent of total market revenue, up from 69.9 percent in 2013.

"2014 saw all device categories post positive growth, unlike in 2013, when application-specific integrated circuits (ASIC), discretes and microcomponents all declined. The memory market was the best performer for the second year in a row, growing 16.6 percent, meaning the rest of the market only achieved 4.9 percent growth," said Andrew Norwood, research vice president at Gartner. "As a group, DRAM vendors performed best, lifted by the booming DRAM market, which saw revenue increase 32 percent to $46.1 billion, surpassing the all-time high of $41.8 billion set in 1995."

Intel saw a return to growth after two years of revenue decline, as PC production recovered, with sales up 7.7 percent (see Table 1). The company retained the No. 1 market share position for the 23rd consecutive year by capturing 15.4 percent of the market, which was down slightly on the previous year.

2014 saw significantly more merger and acquisition (M&A) activity among the major semiconductor vendors than the previous year, with some announced deals still to close in 2015. Among the most significant deals was Avago Technologies' acquisition of LSI, propelling the company into the top 25 semiconductor vendors for the first time. MStar Semiconductor was merged with MediaTek after a prolonged merger, and ON Semiconductor acquired Aptina Imaging. After adjusting for closed M&A activity, the top 25 semiconductor vendors grew at 9.1 percent.Source: Gartner (March 2015)

Additional information is provided in the Gartner report "Market Share Analysis: Semiconductors, Worldwide, 2014."

3D Semi. Manufacturing Will Benefit LAM, Applied and Other Semiconductor Equipment Vendors

3D semiconductor chip process demand will have a very large impact on semiconductor equipment vendors over the next several years. Initially it is being implemented only on NAND flash

3D chip manufacturing will be implemented by many other types of semiconductor chips such as DRAM memories and other high density ICs.

Historically chip size has been shrinking by using stringent photolithography processes. 3D chip manufacturing enables shrinking chip size while using more relaxed photolithography processes,

3D chip manufacturing relaxes photolithography, but it adds stringent demands on other semiconductor manufacturing processes such as layers deposition and etch. This will increase the demand for equipment vendors such as Applied Materials and LAM as is discussed in the article below.

More about 3D semiconductor from November 2012 is in-  3D NAND flash is coming

More about the processing difficulties is in Applied Materials talks about 3D NAND flash production .

A 2009 patent application by Samsung for this technology is - US20100155810

Ron
Insightful, timely, and accurate semiconductor consulting.
Semiconductor information and news at - http://www.maltiel-consulting.com/

Lam, Applied to Ride Price Decline of 3-D NAND, Says Credit Suisse

By Tiernan Ray

Credit Suisse’s chip equipment analyst Farhan Ahmad and chip analyst John Pitzer today write that equipment vendors Lam Research (LRCX) and Applied Materials (AMAT) could both see multiplication of their sales as a result of newer three-dimensional NAND flash memory chips, known as “3-D NAND,” that are becoming more prevalent.

Why are the chips important? 3-D NAND chips have 35% more bits per square millimeter, the authors write, at least in the parts produced by Samsung Electronics (005930KS). With increasing “layers,” that can rise to more than double and perhaps triple the bit density.

As a result of density rising faster than costs, “As the density growth is significantly higher from 2D to 3D, than the CapEx increase from 15nm to 3D, we believe that 3D NAND roadmap can potentially provide a 20%/yr cost reductions for next two years.”

While 3-D NAND has been talked about for some time, the key is that the prices of the products are declining rapidly in the marketplace, as evidenced by Samsung’ ssolid-state drives using the chips, the authors write:

We would note the following recent data points (i) Samsung 3D NAND SSD pricing is now at parity with Planar SSDs. Retail pricing indicates that Samsung’s 3D NAND SSDs have declined 20-25% qtd and are now on price parity with leading planar SSDs. Note that 3D NAND SSD are known to have better reliability relative to 2D NAND SSDs, which makes 3D NAND SSD as better choice at same price points. We believe that recent price reductions are a sign that Samsung is trying to accelerate the adoption of 3D NAND and this could prompt other NAND companies to accelerate adoption of 3D NAND. (ii) SanDisk and Micron 3D NAND announcements are indication that 3D NAND progress is not just limited to Samsung, and there is greater evidence that 3D NAND can significantly reduce cost on NAND (our analysis suggests that 48/64 layer 3D NAND could offer >20% cost reduction over planar). Note that once 3D NAND becomes more economical relative to planar, transition to 3D could accelerate as NAND Companies try to compete on costs. (iii) We are seeing more signs of product wins for 3D NAND. Earlier today Korea Times reported that Samsung’s 3D NAND SSD had secured design wins at GOOG and AMZN data centers. Earlier this month Korea times had also reported that Samsung’s 3D NAND had won the Apple’s MacBook business for next year.

For Lam and Applied, they write,

Our analysis suggests that 3D NAND transition could potentially increase NAND WFE to $9-12bn /year for 2016-2018 versus $5-6bn over last 2 years (assuming 40% bit growth per year). We believe that NAND revenues for LRCX could potentially increase by 3x (or $1.5 bn per year) as 3D NAND accelerates. We also expect AMAT to benefit from the 3D NAND transition but estimate that NAND revenues for ASML will decline by > 50% as litho intensive CapEx for planar NAND is replaced by non litho intensive CapEx for 3D NAND.