The A5 processor – the brain in the iPhone 4S and iPad 2 – is now made in a sprawling 1.6 million square feet factory in Austin owned by Korean electronics giant Samsung Electronics, according to people familiar with the operation.
Almost all of the US$3.6 billion factory’s non-memory chip capacity, 40000 silicon wafers per month, is allocated to Apple. Does this mean A5 CPUs manufactured in Texas are shipped to China to be integrated by Foxconn? And then shipped back to be sold in the U.S.?
I’d like to see Apple experiment with a small scale fully automated iPhone and iPad production facility in Texas. One of the reasons why iPhones and iPads get assembled in China is because of the relatively less expensive labor costs. A fully automated facility similar to the one Steve Jobs built to manufacture NeXT computers would reduce if not completely eliminate the need to have products assembled in China for sale in places far away such as North and South America.
Similar to large LCD clusters where many component manufacturers are co-located, an Apple production cluster in Texas could have many nearby suppliers feeding components into an automated facility to supply markets in the Americas. It would be great to see on the back of iPhones and iPads: "Designed by Apple in California and assembled in Texas".
Update: Matt Drance, Apple Outsider:
Not only is Apple more dependent on Samsung than we had previously thought, but we now know that Samsung has access to A5 schematics. This is proprietary technology designed in-house for products that make up as much as 70% of Appleâ€™s revenue, and itâ€™s in the hands of a competitor whom Apple is suing for patent infringement. Itâ€™s got to be driving Apple nuts.
If Apple is engaging semiconductor manufacturing companies like it has with LCD suppliers, I am certain the smart folks at Apple are learning a great deal regarding the ins and outs of producing chips and its A5 chip in particular. Does this mean Apple will start out its complete vertical integration by building a R&D display and/or CPU prototyping facility in the near future? Who knows.