Apple & Qualcomm Offer TSMC $1 Billion+ Bids for Exclusivity; TSMC Declines

[dgstorm]

Apparently, both Apple and Qualcomm both offered bonus deals of over $1 Billion dollars to TSMC in order for the manufacturer to reserve exclusive capacity for the foundry to build their chips. Apparently, TSMC builds the 28nm Snapdragon S4 line of chips for Qualcomm, and they wanted to insure their market capacity. Apple courted TSMC because they are likely looking to distance themselves as much as possible from Samsung despite assurances from Samsung that they will not let the court outcome affect their production of Apple chips.

Even though both of these companies offered TSMC huge b̶r̶i̶b̶e̶s̶ investments, the chairman and CEO of TSMC, Morris Chang, declined both offers. Apparently, TSMC wants to keep their production more flexible to switch its production between customers and products, just in case some new disruptive tech comes along.

Chief Financial Officer Lora Ho said in an interview on July 19, that (paraphrased) TSMC wants to retain control of its plants, doesn’t want to sell part of itself and doesn’t need cash for investments. Here's a quote with the wrap-up,

Dedicating one facility to a single product or customer creates the risk of a fabrication plant becoming a burden if the product, client or technology changes, said Ho. “You have to be careful. Once that product migrates, what are [we] going to do with that dedicated fab?” said Ho. “We would like to keep the flexibility.”

Wise move.

Source: Bloomberg