Apple bids upwards of $1 billion for exclusive access to TSMC’s chips – Report

Wed, Aug 29, 2012

News, Rumors

One of the strategies Apple has employed to become the most profitable companies on the planet includes buying components up front at a high cost but saving money in the long run by locking in favorable prices.

In a similar vein, Apple reportedly has made attempts recently to attain exclusive access to TSCMC’s custom smartphone chips. But also bidding against Apple is Qualcomm as Bloomberg notes that both companies have recently bid upwards of $1 billion.

And TSMC said no.

As a supplier to Qualcomm, Broadcom Corp., Nvidia Corp. and other companies that no longer operate their own factories, TSMC wants to keep the flexibility to switch its production between customers and products. TSMC Chairman Morris Chang told investors last month that he was willing to devote one or even two factories to a single customer.

Currently we believe we still can fund it,” Chief Financial Officer Lora Ho said in an interview on July 19.

TSMC wants to retain control of its plants, doesn’t want to sell part of itself and doesn’t need cash for investments, Ho said in the interview.

Ho added that if the company dedicates a single plant or process to one particular customer, they run the risk of being left with a specialized fab plant if the product or technology changes.

“You have to be careful. Once that product migrates, what are going to do with that dedicated fab?” Ho explained. “We would like to keep the flexibility.”

via Bloomberg



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