Why the Apple Watch Probably Won't Feature a Samsung-Built 14-Nanometer Chip

By Markets Fool.com

A recent article from ZDNet's Cho Mu-hyun reports that Samsung has "begun producing contract chips using its 14-nanometre FinFET process for an unspecified client." The executive who reportedly claimed that this production reportedly declined to reveal the identity of Samsung's client for these chips, according to the ZDNet piece.

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The article goes on to speculate that these first chips could either be the S1 chip inside of the Apple Watch, which is set to go on sale in "spring 2015," or a Qualcomm application processor. However, it doesn't seem likely that either possibility is correct.

Why it's probably not the watch
The first possibility raised is the applications processor at the heart of the Apple Watch. However, keep in mind that the Apple Watch won't actually pack much computing power, with much of the "heavy duty" processing work being done on the iPhone itself, according to The Verge.

It doesn't make sense for Apple to use a bleeding-edge, very expensive manufacturing process to build a chip that won't spend much of its time doing a lot of actual processing. Sure, the 14-nanometer process would offer lower power consumption, but for such a device, I'd expect the power consumption to be dominated by the screen, not the processor.

In other words, I highly doubt it's the Apple Watch.

What about a Qualcomm processor?
The next possibility is a Qualcomm applications processor. This would typically make sense, but Qualcomm has been public in stating that the Snapdragon 808/810 will be the company's high-end parts through most, if not all, of 2015.

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Additionally, Qualcomm typically moves its cellular baseband processors to new manufacturing technologies before it moves its applications processors. During its analyst day in November, Qualcomm announced that its next generation MDM9x45 cellular baseband (due to show up in devices at some point in 2015) would be built on a 20-nanometer process.

This strongly suggests that late 2014 would be too early for Qualcomm's foundry partners to go into mass production on a 14/16-nanometer part.

Where is the confusion coming from?
I think the confusion comes from the fact that there seems to be a misconception of how long it usually takes from beginning of mass production to actual deployments in devices. According to Taiwan Semiconductor (NYSE: TSM), it takes about a quarter and a half to go from start of production on a 14/16-nanometer wafer to actually shipping the wafer.

So, assuming that Samsung's time from production start to shipment is roughly the same as TSMC's, then production startingnow --December 2014 -- would imply wafer shipments by late April/early May of 2015. It also takes time for the products based on those chips to be built, so add a few months for a high-volume launch of a product like the Apple Watch or a smartphone.

In other words, I'd believe Samsung is building 14-nanometer chips for Apple's next iPhone, but either the Apple Watch or a Qualcomm apps processor seem rather unlikely.

The article Why the Apple Watch Probably Won't Feature a Samsung-Built 14-Nanometer Chip originally appeared on Fool.com.

Ashraf Eassa owns shares of Qualcomm. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.