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TUAW Deals

Apple, Qualcomm tried to purchase exclusive access to TSMC chip production

Bloomberg is reporting that both Apple and Qualcomm were turned down by Taiwan Semiconductor Manufacturing Company (TSMC) in attempts by the two companies to invest cash and gain exclusive access to smartphone chips.

Each company proposed investing more than US$1 billion in order to have TSMC set aside chip production capacity exclusively for them. Qualcomm and Apple are both trying to secure the chipmaking capacity to satisfy demand for smartphones, and either one of the deals would provide Apple with an alternative to Samsung -- which currently builds the primary silicon for both the iPhone and iPad. For Qualcomm, it's a necessary deal as well. The company's earnings are being limited by shortages of mobile phone chips it designs, and it no longer operates its own factories.

TSMC is willing to devote a couple of factories to a single customer, but wants to retain control of its plants and doesn't need cash for investments, according to TSMC executives. The company is wary of dedicating a facility to one customer or product, since if the product or technology changes, they're stuck with a plant that requires a significant investment in order to repurpose it.

For the present time, negotiations are apparently continuing although TSMC, Apple, and Qualcomm are not commenting.

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