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Apple could add GlobalFoundries to iPhone mix

The company wants to reduce reliance on Samsung, but Korean firm likely to keep a foundry role along with new suppliers

By CAROLINE GABRIEL

Published: 15 July, 2013

READ MORE: US | Apple | Processor | iPhone

Samsung may have overtaken Apple as the world's largest chip buyer last year, but the US firm still spends over $20bn a year on semiconductors, and with its mobile device supply chain in flux, foundries are fighting for its favors. Reports are flooding in as the company is set to make key decisions about its next generation A9 processors. It seems likely to stick with Samsung, despite the companies' handset feuds, for at least some of its processor production, while GlobalFoundries is battling TSMC to provide a second string.

Google has recently used a 'made in America' pledge to publicize its upcoming Moto X handset, taking a swipe at Apple's Asian manufacturing base, and implicitly at some of the recent scandals about employment practices there. GlobalFoundries could provide a US-based alternative and is reported to be in talks with Apple.


The foundry has opened a new $6bn semiconductor plant and campus in Saratoga County in New York state, which will specialize particularly in mobile device processors. The company has not yet announced a tier one client for its facility but any deal with Apple could not only boost GlobalFoundries' mobile revenues and credibility, but turn its plant into the hub of a new hi-tech community. This would also be popular with politicians and industry figures which have been campaigning to keep skills and technology in the US rather than exporting them to Asia.

A source close to GlobalFoundries - once the chipmaking arm of AMD - told CNet that the Saratoga center still had "a lot of idle capacity and a lot of new tools", as well as advanced processes for ARM-based chips. With Apple trying to reduce its reliance on Samsung - which codeveloped the original iPhone processors and has been the sole manufacturer of more recent, Apple-designed versions - it has been expected to introduce TSMC of Taiwan into the mix for its next wave of chips, but could also include GlobalFoundries.

A transition from Samsung to the US-based foundry would be relatively smooth, claims the CNet source, because "GlobalFoundries and Samsung have the same technology foundation based on an IBM joint development agreement". And there have been reported hitches in plans to get close to TSMC - both the Taiwan firm's ability to deliver the quantity and quality Apple needs, and its refusal to guarantee the iPhone maker priority access to manufacturing resources in the case of shortages. With scarce production capacity being a key issue for the largest OEMs - one which hit Qualcomm's results last year - there is also speculation that GlobalFoundries might trump TSMC by offering Apple a stake in the New York facility, increasing its control of its processor destiny.

However, it is highly unlikely that Apple will be able to cut the ties with Samsung altogether in the coming generation or two of its mobile processors, even if it has more futuristic plans to change path, for instance by partnering with Intel, which is building its own foundry business. Last year there was talk that it would guarantee capacity for Apple in return for getting Atom into certain iDevices. For now, though, Samsung remains the supplier with the greatest knowledge of the Apple platform and the largest amount of capacity dedicated to it, and has just been upgrading some of its fabs. According to Korean sources, Samsung has signed a deal to supply A9 chips made with the cutting edge 14nm process, from 2015. That would suggest at least some role for Samsung as far ahead as the 'iPhone 7' (assuming Apple will launch an iPhone 5i, 6 and 6i in between).

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