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TSMC turns down offers from Apple and Qualcomm to secure chip orders

on August 29, 2012 – 5:20 pmNo Comment

Every iOS device on the market has a chip inside that was manufactured by Samsung. Apple, looking to distance themselves from Samsung because they’re one of their fiercest competitors, has long been rumored to switch to TSMC. TSMC is a Taiwanese company that makes chips. One of their most well known clients is Qualcomm. Qualcomm can’t feed demand for their new Snapdragon S4 part fast enough. According to a report from Bloomberg, both Apple and Qualcomm have offered TSMC at least $1 billion so that they can get secure some, but not all, of TSMC’s output. TSMC turned down both of them for reasons we don’t quite understand. TSMC needs the money to increase their output, otherwise the smartphone market is going to experience a chip shortage. Did TSMC request more money than either Apple or Qualcomm were willing to offer? The world may never know. What is known however is that TSMC says they would rather remain flexible when it comes to picking their customers.

There aren’t that many other fabs out there. Intel makes their own chips, and they’re desperately trying to convince handset makers to switch from ARM to x86, but that doesn’t look like it’s going to happen anytime soon. GlobalFoundries makes chips too, so we’re expecting to hear something from them maybe next year.

So what does this news really mean to the average consumer? Simple. What happens when something has a huge demand, but there are limited supplies? Prices go up, which means your next smartphone might be just a tiny bit more expensive than what you were prepared to pay.

Don’t expect this shortage to ease up until next year at the earliest.

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Stefan has been writing about the mobile phone industry since November 2006. He also spent 14 months at Nokia between 2008 and 2009, but has since purchased a Nexus One and an Apple iPhone. He's watching Windows Phone like a hawk, hoping it'll get better with time.