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Apple and Qualcomm Cannot take Exclusive Chip Manufacturing from TSMC

Taiwan Semiconductor Manufacturing Corporation (TSMC) had refused the bids of Apple and Qualcomm to make exclusive chips only for them. The report came from Bloomberg who added that both proposals included investments with more than $1 billion from each Apple and Qualcomm for the world’s largest custom maker of chips to set aside production dedicated for making chips exclusively for them.

According to data compiled by Bloomberg industries, the market of smartphones is estimated to $219.1 billion that is why both companies are trying to reach their goals in fulfilling the booming market. If the deal was pushed through, perhaps Apple can find an alternate supplier of their chips which Samsung currently has been doing. They are slowly taking their pace in leaving behind their biggest rival in smartphone industry. On the other hand, Qualcomm needs to boost supply, since shortages are starting to limit earnings.

To meet the high demands of smartphones, Apple and Qualcomm are trying to take exclusivity from TSMC so they can improve their position in a supply chain where more companies falling behind to provide millions of parts. The advanced smartphones can now act like computers do, and to further enhance this, advancement in processors can equally meet this requirement. Since TSMC was Qualcomm’s biggest supplier, they are very successful because it worked with multiple customers aside from them. If they changed their strategy like dedicating one facility to a single customer or product, chances are it will provide burden when that customer will change or seize their products.

Bloomberg  Reports:

“As a supplier to Qualcomm, Broadcom Corp. (BRCM), Nvidia Corp. (NVDA) 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.”

Will Apple and Qualcomm really need to have exclusivity to further enhance their products?

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