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Wednesday, August 29, 2012

Apple & Qualcomm invest into Taiwan firm to fend off Samsung

Apple Inc. (AAPL) and Qualcomm Inc. (QCOM) were rebuffed in separate attempts to invest cash with Taiwan Semiconductor Manufacturing Co. (2330) in a bid to secure exclusive access to smartphone chips, people with knowledge of the matter said.

Both proposals included investments, each of more than $1 billion, for the world’s largest custom maker of chips to set aside production dedicated to making chips exclusively for them, said the people, who declined to be identified because the details are not public.

The two companies are trying to satisfy booming demand for smartphones, a market estimated by to be worth $219.1 billion, according to data compiled by Bloomberg Industries. Any deal would give Apple an alternate supplier to Samsung Electronics Co. (005930), which builds the main chip used in the iPhone and iPad and is also its biggest rival in smartphones. Qualcomm needs to boost supply, since shortages are starting to limit earnings.

As a supplier to Qualcomm, Broadcom Corp. (BRCM), Nvidia Corp. (NVDA) and other companies that no longer operate their own factories, TSMC wants to keep the flexibility to switch its production between customers and products. TSMC Chairman Morris Chang told investors last month that he was willing to devote one or even two factories to a single customer.

“Currently we believe we still can fund it,” Chief Financial Officer Lora Ho said in an interview on July 19.

TSMC wants to retain control of its plants, doesn’t want to sell part of itself and doesn’t need cash for investments, Ho said in the interview.

Dedicated Fabrication

Qualcomm Chief Executive Officer Paul Jacobs said in June that he was willing to write ‘big checks’ to improve supply shortages that have held back earnings growth this year. The San Diego, California-based company is working with multiple suppliers to improve output, he said.

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