Apple Reportedly Opts TSMC's 16nm for A9 Over Samsung's 14nm

Industry executives say Apple has contracted Taiwan Semiconductor Manufacturing Co. (TSMC) to make its A9 processors using 16nm process instead of the 14nm process being promoted by the Samsung-Globalfoundry camp in consideration of relatively better performance of the TSMC processor.

They justify their stance by offering the usual explanation, that the 14nm process may be more advanced than the 16nm process, but the 14nm process co-developed by Samsung and Globalfoundry has so far failed to achieve satisfactory defect-free rate compared to TSMC's 16nm process.

Report has it that Apple and mainland Chinese fabless house Hisilicon are the first users of TSMC's 16nm process, who have asked TSMC to deliver their chips in July and June, respectively.

Industry executives predict TSMC to accelerate its plan to boost 16nm process capacity sometime in the second half of this year if everything proceeds without glitch.

TSMC has declined to comment on such reports, but industry executives interpret the statement by TSMC Co-Chief Executive Officer Mark Liu as stating the foundry's confidence in its 16nm process to be a shoe-in to land Apple's A9 contract.

Also the industry executives have expressed views based on TSMC Chairman Morris Chang's statement in a letter to company shareholders that the foundry has been equipping itself with the right mix of technologies to leverage maximum benefit for shareholders over the next five years.

Although TSMC is projected to see consolidated revenue for the second quarter to decrease 7-8 percent from the previous quarter, steeper than expectations, industry executives predict the foundry to regain growth momentum in the second half of this year to be driven with rising 16nm process production.

Liu feels that the 16nm process will help TSMC further boost its share of the global silicon foundry market after the company bagged over 50 percent of the market last year, also predicting the 16nm process to grow relatively faster as contributor than its 20nm process to the percentage of corporate quarterly revenue in the second half and even help the foundry retain exclusive leadership in the industry next year.

After outpacing Samsung in the race involving 16nm against 14nm, TSMC is now reportedly setting sights on Intel Corp., the world's No.1 chipmaker by revenue, to vie for other chip contracts to be released by Apple.

To strengthen its capacity to take on rivals, TSMC will deploy a pilot production line of 10nm process at its Fab 12 factory, which is located at the Hsinchu Science Park in northern Taiwan or the original tech industrial park on the island, this June.

Industry executives say the Apple's A10 processor is designed around the 10nm rule.

Morris Chang says the company is at work providing the design ecosystem for its 10nm technology, having started the IP validation process and completed certification of over 35 design tools. The company plans to begin at the end of this year to do customers' 10nm tapeouts. Tapeout is the final stage of the design cycle for integrated circuits, the point at which the artwork for the photomask of a circuit is sent for manufacture.

TSMC has designated its Fab 15 factory, located at the Central Taiwan Science Park, as the hub of its 10nm production in the initial stage, with plans to tool the factory with 10nm equipment by the middle of next year and begin volume production based on such advanced process by the fourth quarter.

The company is projected to complete its last 10nm production line by 2016 or 2017.