Competition within iPhones
With Intel rapidly strengthening its foundry business, Samsung Electronics and TSMC appear to become more nervous. Experts in the semiconductor industry are confident that Intel either already turned over more than US$1 billion a year from its foundry business, or it will do so soon.
Intel has not paid much attention to the foundry business so far, since it has been able to maintain a dominant position in the market with CPUs and memory chips. However, the chipmaker is now turning its attention to the foundry business, as its influence in the semiconductor market isn't what it used to be. Intel's shrinking influence is due to the fact that the global market's center of gravity shifted away from PCs towards mobile devices. Altera, which was acquired by Panasonic and Intel, already asked the largest semiconductor company to produce chips. Spreadtrum Communications, the largest fabless semiconductor company in China, is also expected to be a customer of Intel.
Intel's efforts to focus on the foundry business are casting a shadow on Samsung's non-memory business. Both of them have a 14-nm class process technology, but chips made by Intel are widely acknowledged to be superior to those produced by Samsung in terms of product performance and productivity. Unlike Taiwan Semiconductor Manufacturing Company (TSMC), which has dozens of customers, Samsung receives orders mostly from some large corporations like Qualcomm or Apple. Hence, a loss of just one customer would deal a serious blow to the Korean tech giant. The System LSI business, which is involved in Samsung's foundry business, suffered hundreds of billions of won of losses last year due to its failure to win an order for application processors (APs) to be used in Apple's iPhone 6. The System LSI business turned over an estimated US$2.412 billion in 2014.
The industry is paying a lot of attention to whether or not Intel will compete with its rivals to obtain an order for APs to be featured in Apple's next iPhone and iPad models. Both Samsung and TSMC are suppliers of Apple, which reports hundreds of millions of dollars in sales per year. An industry source said, “Intel is highly likely to try to win an order from Apple starting around 2017.” The source added, “The U.S. semiconductor company is expected to compete starting from iPads and MacBooks, the supplies of which are smaller than those of iPhones, and to expand its reach to other iOS devices.”