iPhone 6 Rumors: Apple’s 2014 iPhone Model Reportedly To Feature TSMC-Built Processors; Samsung Will Make Chips For iPhone 5S

Rumors about the next iPhone have become so intense, people are already talking about the 2014 model of Apple’s (NASDAQ: AAPL) flagship handset device, which company observers refer to as the “iPhone 6” -- even though this year’s model -- to be called the iPhone 5S? -- hasn't been announced yet by the company.

Taiwan-based news website DigiTimes published a report on Thursday that said Taiwan Semiconductor Manufacturing Co. (TSMC) is expected to grab 100 percent of the application processors (APs) order for the 2014 model of the Apple iPhone.

Citing industry sources, the report said Apple, the Cupertino, Calif-based tech giant, might sign a contract with TSMC for manufacturing the APs that would be used in the iPhone 6, which is slated to launch in the second half of next year.

The sources revealed that the demand for the processors from Apple is huge, and in order to meet it, TSMC has begun moving in equipment to the Phase 5 facility for its 12-inch wafers (Fab 12), which is located in southern Taiwan. In addition, the company's Phase 5 facility for 14-inch wafers (Fab 14) will reportedly be ready for production toward the end of this year.

The report also said that Samsung would still manufacture the chips for the 2013 model of the iPhone, unofficially dubbed the “iPhone 5S,” which would likely be released in the second half of this year. However, considering TSMC's pace of expansion at Fab 14, the report suggested that Apple might be planning to minimize its dependence on Samsung for chip manufacturing.

“TSMC broke ground for the phase-5 facility of Fab 14 in April 2012, followed by a beam-raising ceremony in November. Equipment move-in began in less than one year after the facility's groundbreaking,” said the report.

TSMC said earlier that the Fab 14, Phase 5 facility would be only the second 20nm-capable fab facility scheduled to begin volume production in early 2014, the report added.

This is not the first time Apple has been rumored to approach TSMC to make the chips for the 2014 iPhone model. It was reported last month that next year the iPhone 6 would be powered by a new A7 chip that would be developed by TSMC.

The report said that the existing contract for A-series chips between Apple and Samsung expires in June, and if it’s not extended, Apple would be allowed to shift the production order to TSMC without any penalty.

Rumors are also rife that Apple will launch the iPhone 6 in June 2014 with a bigger display. Jefferies analyst Peter Misek has reportedly said that the company is readying its supply chain for the device, although it will take at least two or three quarters to develop and manufacture them.

Cheaper iPhone To Be Launched In Small Volumes

In addition to the iPhone 6 rumor, DigiTimes also reported that Apple might launch a long-rumored cheaper iPhone model with initial quarterly shipments of only 2.5 million to 3 million units. According to the report, the company could go with small volumes to test market responses.

Sources in the iPhone supply chain in Taiwan also stated that the low-cost iPhone version might come with a 4-inch LTPS panel powered by an A6 processor, optimizing the high yield rates of mature components. Apart from that, the device could also sport a cost-effective plastic chassis.

“Apple will continue to subcontract production of the low-cost model to existing ODM partners, including the Foxconn Electronics Group and Pegatron,” the report added.