Apple Supplier Building Chips for New iPhones

Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) is mass producing next-generation processors for Apple Inc.’s (AAPL) 2018 iPhone launches, people familiar with the matter told Bloomberg.

The new chip will feature a 7-nanometer design, the sources said, making it smaller, faster and more efficient than the 10-nanometer chips used in current Apple devices, such as the iPhone X and iPhone 8. Better processors offer numerous benefits, helping smartphones to run apps faster and last longer on a battery charge, noted Bloomberg. The new 7-nanometer design is expected to provide 40% greater power over the A11 chips that appeared exclusively in the iPhone X, 8, and 8 Plus, according to MacRumors.

TSMC, the world’s largest contract chipmaker, confirmed back in April its plans to start mass-producing 7-nanometer processors, without specifying who it would be building them for. Apple and TSMC declined to comment on speculation that the chips will appear in new iPhone models.

According to Bloomberg, Apple could be one of the first smartphone manufacturers to use the new technology in consumer devices. However, access to TSMC’s latest breakthrough is unlikely to give it much of an advantage over its biggest competitor Samsung Electronics Co. The South-Korean based giant said on Tuesday that it also plans to introduce the components to its phones in 2018.

Apple is expected to launch at least three new iPhones this fall. They include a larger successor to the iPhone X and a lower-cost model that uses many of the iPhone X’s features with a cheaper LCD screen.

In recent months, several companies have warned that demand for smartphones and the components that help to power them is drying up. Global smartphone shipments fell 8.5% in the fourth quarter, according to IDC, one of many revelations that has weighed on Apple’s share price. (See also: 13F: Hedge Funds Sold Off Apple Last Quarter.)

Over the past few years, the vast majority of Apple’s revenue growth has been driven by iPhone sales. Now that the market is slowing, some analysts believe that the Cupertino, California-based company will start turning its attention to its faster growing services platforms. (See also: Apple Will Depend on Services for Revenue Growth: Morgan Stanley.)

Do you have a news tip for Investopedia reporters? Please email us at
Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.