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  • Munster: Apple is Better Off Focusing on Chip Process Development


    Analyst Gene Munster of Piper Jaffray estimates that it would cost Apple roughly $2 billion if it were to build its own chip development facility for a 10-nanometer silicon process. In contrast, it would cost Apple between $5 billion and $7 billion to buy a working factory. As a result, Munster believes it would be in Apple’s best interest to develop its own logic process technology rather than buying a factory. According to him, if Apple could license or sell its own custom process to a variety of foundries, the company’s overall chip production costs would lower by a significant amount.

    Munster continued by noting to his investors that the number of companies that can develop silicon processes is dwindling. By taking on the task, Apple could expand its options for future A-series mobile chips, which powers the iPhone, iPad, and iPod Touch. The note was issued in response to a rumor which was published last week that suggested that Apple had bought in to an unnamed chip fabrication plant, potentially one owned by United Microelectronics Corporation. Munster doesn’t see UMC has a likely fit for Apple, as the company’s process technology is behind major chipmakers like Intel, Samsung, IBM, and Global Foundries.

    According to Munster, the three strongest options for Apple to partner up with would be Samsung, Taiwan Semiconductor Manufacturing Co., and Intel. He also believes that the three options are unlikely as Samsung is a major competitor, TSMC has had issues developing chips with a 20-nanometer process, and Intel likely doesn’t have the infrastructure or intellectual property to be a foundry for system-on-a-chip designs. Another potential option for Apple would be to buy IBM’s process development operations but Munster said he’s heard various rumors over the last month that suggests the company’s silicon assets could be up for sale. He continued by theorizing the following:

    Apple could also tailor manufacture processes to their needs as opposed to a broad base of customers. IBM has developed a finFET transistor on fully depleted silicon on insulator process (FD-SOI). We believe this is the best process for low power SoC and it would best fit Apple's needs.
    The main issue with going with IBM would be execution. Although IBM has had strong process technology, it has been difficult to use in high-volume manufacturing.

    As of right now, Piper Jaffray maintained its “overweight” rating for AAPL stock with a price target of $665. We’ll have to wait and see what move Apple makes going forward.

    Source: Piper Jaffray via AppleInsider
    This article was originally published in forum thread: Munster: Apple is Better Off Focusing on Chip Process Development started by Akshay Masand View original post