TSMC wafer fab

An unconfirmed report suggests that Apple has turned to Taiwan Semiconductor Manufacturing Co. to produce its upcoming A7 processor for mobile devices.

The Taiwanese contract manufacturer is the largest foundry, or maker of chips that are designed by other companies. DigiTimes reported that the company is expected to tape out Apple’s next A7 processor in a 20-nanometer manufacturing process in March and then begin volume production in May and June. That could pave the way for commercial shipments in the first quarter of 2014. TSMC declined to comment to DigiTimes. (Note, DigiTimes has had a spotty record on reporting rumors).

If true, the move makes sense for Apple, as it is locked in litigation with Samsung, the current supplier of its A series chips. A chip is “taped out” when the circuit design process is completed (such designs used to be put on computer tapes). But it takes a while to stamp the bugs and move into large-scale production. TSMC spends about $9 billion a year on capital expenses and it competes with the likes of Samsung, UMC, and even Intel. Traditionally,┬áIntel just made its own chips, but it has begun a serious effort to become a foundry for other chip designers.

Earlier this year, rumors surfaced that TSMC had begun trial production of A6X chips for Apple’s fourth-generation iPad. The move was said to be part of a long-term diversification program.