of Intel has approached Tim Cook and has asked Tim Cook to consider Intel, and at this time, Intel was the major supplier for Apple’s Mac line,” Chang reminisced. “I knew a lot of Intel’s customer customers in Taiwan […] none of them liked Intel [as it] always acted like they were the the only guy [with] microprocessors. […] The Foundry business where TSMC […] does not compete with customers and even if Intel is trying to do business in good faith they do have the conflict [of interests.”
When Intel’s CEO Paul Otellini approached Tim Cook in early 2011, offering to manufacture Apple’s chips, Apple paused discussions with TSMC for two months to evaluate the proposal.
Morris Chang, concerned about this pause, traveled to Apple’s headquarters to check on the situation. In a private meeting, Tim Cook reassured Chang that Apple would not choose Intel.
“Intel just does not know how to be a foundry,” Tom Cook reportedly told Chang.
The implication was that Intel lacked the customer-centric mindset required for a foundry business. Unlike TSMC, which tailors its process technologies to meet customer needs, Intel was used to designing and producing its own chips and struggled to adapt to servicing external clients. By contrast, Apple valued TSMC’s ability to listen and respond to specific demands, something Intel historically did not do.
“When the customer asks a lot of things, we have learned to respond to every request,” Chang said. “Some of them were crazy, some of them were irrational, [but] we respond to each request courteously. […] Intel has never done that, I knew a lot of customers of Intel’s here in Taiwan and all [of them] wished that there were another supplier.”
Indeed, the very first encounter with Apple disrupted TSMC’s roadmap. TSMC planned to move from 28nm planar to 16nm FinFET, but Apple wanted a custom 20nm-class planar node instead. At the time, TSMC did not have enough R&D teams to develop two process technologies at once, so the company had to divert people working on CLN16FF to CLN20SOC to meet Apple’s needs in 2014.
Although Apple dual-sourced its A8 and A9 processors at 20nm and 16nm-class process technologies from Samsung and TSMC, Apple eventually committed to TSMC for all future processors. The Apple Silicon strategy cemented TSMC’s position as the exclusive supplier, as the company’s system-on-chips for different applications share quite a lot of IP.
The decision to meet Apple’s demands was critical in TSMC surpassing Intel as the world’s most advanced semiconductor manufacturer. Apple’s business gave TSMC predictable high-volume orders, helping justify massive CapEx and R&D investments. As a result, TSMC has consistently outpaced Intel by introducing leading-edge nodes.
