This choice made by Tim Cook in 2011 paved the way for the continued success of iPhone
Apple and TSMC are a team that clicks perfectly. When Apple needs a foundry to build semiconductors for any of its devices, it turns to TSMC and the Taiwan-based company always seems to have capacity for its biggest client. But there was a time when Apple and TSMC might have ended up as Apple and Intel. That time was February 2011 and TSMC founder Morris Chang remembers what happened. He recently told the story to Acquired on YouTube.
It took Tim Cook just a couple of months to choose TSMC over Intel as Apple's exclusive foundry
So it was February 2011 when then Intel CEO Paul Otellini spoke with Tim Cook about taking over the job of manufacturing chips for the iPhone. Cook wasn't CEO of Apple at the time and it wasn't until August of that year when Steve Jobs felt that he had to leave Apple, that Cook was given the CEO position for good. Still, as Chief Operating Officer of Apple at the time, and with Jobs cancer getting worse (he would succumb to pancreatic cancer in October of that year), it wouldn't be unusual for Tim Cook to be the person at Apple that Otellini would speak with.
It took Cook only a couple of months to select TSMC over Intel to build chips for the iPhone. Intel did have the advantage of supplying Apple with processors for the Mac but any advantage that Intel might have thought it had at the time was an illusion. After all, Chang said in the interview that around the time Cook turned down Intel, he told Chang, "Intel just does not know how to be a foundry."
"I wasn't too worried. I knew a lot of Intel's customers in Taiwan, and none of them liked Intel. Intel always acted like they were the only guy for microprocessors."-Morris Change, founder, TSMC
Chang pointed out that TSMC had manufacturing capabilities Intel did not have at the time, and when it came to unusual requests from customers, TSMC responded to each one no matter how off the wall it seemed. Chang said, "Some of them were crazy, some of them were irrational, but we respond to each request courteously. Intel has never done that." This ability to give TSMC's customers its time and effort might have been one of the things that led Apple to choose the company to be its exclusive foundry.
TSMC builds all A-series and M-series chips for the iPhone, iPad, and the Mac
To this day, TSMC builds all iPhone, iPad, and Mac chips including the A-series chips for the iPhone and some iPad models. Apple developed the M-series chipsets, also built by TSMC, to replace Intel's processors on the Mac although the M-series is now used to power some iPad models.
TSMC lists as clients big tech firms such as Apple, Qualcomm, MediaTek, AMD, Nvidia, and Broadcom and currently has a market capitalization of 902 billion dollars. Meanwhile, Intel, which had been doing some contract foundry work in the past, decided to make such business a bigger part of the company and introduced Intel Foundry in February 2024.
Looking for fabless clients (companies that design chips but don't own any fabrication facilities) Intel reeled in a huge fish last September when Amazon's AWS cloud services unit inked a deal with Intel for the latter to produce AI chips. But the business has been spilling red ink which is one of the reasons why the company has had a rough time over the last 12 months. With its stock down about 54% over the last 12 months, Intel is valued at 85 billion or less than 10% of TSMC's current valuation.
TSMC owned a controlling 64.9% share of the global semiconductor foundry market in the third quarter of 2024. That was up from the 62% slice of the pie that the company owned during the second quarter of 2024. Samsung Foundry is second behind TSMC in the global semiconductor foundry market. However, poor yields have impacted the business leaving Samsung Foundry with a 9.3% share during Q3 of 2024.
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