Apple (NSDQ: AAPL) has reportedly placed an order with Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) for its new line of A6 processor chips. The Taiwanese chip maker will start shipping the order at the end of the first quarter of 2012, according to reports. Executives from Taiwan Semiconductor Manufacturing said that a number of rush orders will push the company’s third-quarter revenue past the company’s earlier guidance. However, the rush orders are not expected to have an impact on the company’s fourth-quarter results as the semiconductor industry continues to grapple with slackening demand amid slowing global economic growth.
The Hsinchu-based company I first profiled here is said to be one of the beneficiaries of a growing dispute between Apple and its long-time chip supplier Samsung (OTC:SSNLF) of South Korea. Samsung supplies the A4 and A5 chips used in Apple’s iPhone and iPad tablet computer. However, Samsung has increasingly established itself as a strong competitor in the smartphone space and in April Apple filed suit against the South Korean company for copying key design elements. Samsung responded with a string of lawsuits that alleged Apple had violated patents on Samsung’s wireless technologies. Samsung had been in a delicate position–some industry watchers estimated that Apple was the company’s largest customer. But recent moves by Apple to establish deals with new suppliers such as Taiwan Semiconductor Manufacturing have led Samsung to ratchet up the rhetoric.
An executive from the South Korean company recently told the Associated Press that Samsung would abandon its “passive” stance toward Apple. A series of media reports suggests that Samsung may launch a number of lawsuits against Apple timed to coincide with the release of the iPhone 5 in South Korea.
The deteriorating relationship between Apple and Samsung is expected to benefit Taiwan Semiconductor Manufacturing, which will receive a significant chunk of this business.
Taiwan Semiconductor Manufacturing is one of five companies that will invest USD4.4 billion over five years to create a research and development hub for nanotechnology in Albany, NY. The project will create 6,900 jobs, 2,500 of which will be new nanotechnology positions, according to an announcement by New York governor Andrew Cuomo.
However, the company is reportedly mulling a cut to its capital expenditure (CAPEX) plans for this year. Taiwanese media said that the company may reduce its CAPEX by 19 percent to USD6 billion, though reasons for the reported cut were not provided.
Taiwan Semiconductor Manufacturing is the world’s largest contract chip maker by revenue. Though its profits are tied to the fortunes of the global economy, the company’s growing relationship with Apple represents a significant coup.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.