By Tiernan Ray
Paul Peterson and Steve Mullane of boutique shop BlueFin Research Partners this morning reflect on some curious signals they think are coming from Samsung Electronics‘s (005930KS) Austin, Texas semiconductor plan, where Samsung fabs Apple‘s (AAPL) customer designed “A” series processors for its iPhone, iPad and iPod Touch, citing data from “supplier checks” for materials that go into the fab.
The authors write that there has been a sudden stoppage” of production of parts at 32 nanometer dimensions and at 28 nanometer dimensions, writing “Our checks indicated that Samsung planned to increase the 28nm node starts to a target level of 40,000 – 50,000 wpm in September, from 6,000 to 7,000 in May.”
“But our recent checks are indicating that the semi material suppliers have been recently caught off guard with a sudden change of production plans at this site,” the authors observe.
“While the 45nm technology devices remain at the same production pace, the 32nm technology node wafer starts have suddenly declined to 5,000-10,000 wpm levels,” and “it appears that the new production ramp plans for the 28nm technology designs have also been lowered from the original ramp of 40-50K wpm in September to a new target of just 30K wpm.”
The authors opine there might be three different things happening: Apple is going to use a Qualcomm (QCOM) processor for the rumored lower-cost iPhone, thereby reducing its own production of its in-house chip; Taiwan Semiconductor (TSM) has taken over some production from Samsung; or Apple simply built up inventory at Samsung’s fab with an overly-rosy forecast for its likely shipments.
The authors aren’t really sure it’s any one of those three explanations, but perhaps a combination:
This rumor [Qualcomm supplying an iPhone] has been around since the beginning of the year, but many believe it is highly unlikely that AAPL would abandon their own internal processor architecture for their low-end phone […] But while this theory explains why Samsung Austin could see a drastic reduction in 32 nm wafer output, it doesn’t explain the disappointing ramp of 28 nm […] However, it is possible that AAPL could have accelerated this transition [to TSM] to begin at the 28 nm node, although capacity tightness at TSM begs the question as to how the foundry could have enough capacity to support a slice of AAPL’s business near term. And while this theory could explain the lack of a bigger 28 nm ramp at Samsung Austin, it doesn’t explain the sharp follow off in 32 nm production […] While a supply/demand imbalance is certainly possible, it doesn’t seem likely that AAPL wafer demand would fall sharply at a time when they are within months of launching several major products to their flagship iPhone and iPad families, especially at the ‘new’ 28 nm node.
Apple shares today are up $1.87, or half a percent, at $433.87.