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iPhone 7 Chip Manufacturer Counts Cost of Earthquake Damage

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The sole company responsible for manufacturing the processor in Apple's upcoming iPhone 7 and iPhone 7 Plus has reduced its shipping estimates after its facilities were damaged in an earthquake (via DigiTimes).

Taiwan Semiconductor Manufacturing Company (TSMC) suffered the damage to its plants on February 6 when a 6.4-magnitude quake struck the southern part of the country.

Initially, TSMC reported that the damage incurred would reduce the amount of chips it could ship by less than 1 percent. However, this morning the company revised that estimate and said shipment numbers could be affected over the 1 percent mark, but stopped short of giving a specific number.

iphone_7_render_mr

Mockup of iPhone 7 case showing flush rear camera and no antenna bands across rear

Despite the earthquake, TSMC stated it is confident of hitting target revenues of $5.9-6.0 billion in the first quarter of 2016. Whether the damage will affect production of the iPhone 7 chip, which is expected to begin in June, remains unclear.

TSMC reached a deal with Apple only last week to become the sole manufacturer for the iPhone 7's processor, partly thanks to its 10-nanometer manufacturing process. Apple used both Samsung and TSMC to manufacture the chips for the iPhone 6s, perhaps in a bid to lower risks, but the arrangement caused some controversy after benchmarks indicated performance variances between the companies' processors.

The processor in the iPhone 7 and iPhone 7 Plus is likely called the A10. Both devices are expected to debut in September. Leaks of the phones' design suggest that it may have a flush rear camera and a lack of antenna bands on its back. Other rumors indicate that the 7 Plus may feature a dual-lens camera system and that it may be waterproof and not have a headphone jack.

Tags: A10, TSMC
Related Forum: iPhone

Top Rated Comments

136 months ago
This is the risk of using one manufacturer. If something goes wrong to effect supply, cutting Samsung out will not seem like such a smart move.
Score: 5 Votes (Like | Disagree)
macs4nw Avatar
136 months ago
Earthquakes have a thing for delaying iPhones.
I realize you're probably saying that in jest, but it's just that a lot of the manufacturing of the components that go into our tech goodies, takes place near the "Ring of Fire ('https://en.wikipedia.org/wiki/Ring_of_Fire')" where roughly 90% of the world's earthquakes occur, often also accompanied by tsunamis and massive flooding. Remember the massive flooding in Thailand ('http://www.nytimes.com/2011/11/07/business/global/07iht-floods07.html') which caused widespread HDD shortages in 2011-2012?

Those of us who don't live near there can count their blessings, and I for one will gladly suffer some occasional delays to my material indulgences as I watch untold human suffering on the news from the safety of my living room, when another disaster hits those unfortunate people.
Score: 3 Votes (Like | Disagree)
ArtOfWarfare Avatar
136 months ago
This 1% estimate was before. Now the estimate is bigger and they aren't saying by how big.
They said it was going to impact them by less than 1%. Later, they said it might be over 1%.

Might be over 1% suggests to me it's probably not a lot more than 1%.
Score: 2 Votes (Like | Disagree)
136 months ago
So Apple's first step towards getting rid of Samsung as an essential supplier backfires immediately, interesting.

They said it was going to impact them by less than 1%. Later, they said it might be over 1%.

Might be over 1% suggests to me it's probably not a lot more than 1%.
Or, it's just carefully worded to smooth over the more serious reality, like how all Apple Support articles regarding widespread hardware issues begin with "We've discovered that a very small number of units are experiencing issues with..."
Score: 1 Votes (Like | Disagree)
kdarling Avatar
136 months ago
It's never a good idea to put all your eggs in one basket with a sole supplier, especially as Apple is rapidly heading towards becoming a one product company heavily dependent on a few key suppliers.

Its about time they figured out a way to automated more of the manufacturing process and bring some jobs back to the US.
I haven't looked in a long time but aren't most chip foundries in the same geographic area anyway making them all susceptible to a major event such as this?
All these factors... multiple suppliers, geographic stability/diversity, and US factory... were taken care of when Apple was using Samsung, who had built an extra multi-billion dollar foundry in San Antonio Texas a half decade ago to supply Apple's ARM chips.

Those chips normally account for about 10% of an iPhone's bill of materials.

Moving completely to a Taiwan supplier, while closer to Foxconn China and probably cheaper, is a negative for both Samsung and Texas. And not very smart for Apple apparently, either. It smacks of a bean counter decision, with cost being the most important factor.
Score: 1 Votes (Like | Disagree)
136 months ago
Let me guess, Samsung created the earthquake so they could get in on part of the deal now?
Score: 1 Votes (Like | Disagree)

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