Reuters reports Apple has entered trial production of its A6 processor at TSMC. Apple's A5 is manufactured by Samsung, but the company is keen on moving away from the South Korean company due to patent disputes.
Samsung is the sole supplier of the A5 chips used in the iPad 2, but Apple has hinted it is keen to diversify away from the Korean company. The two are battling a legal dispute over patents, and Samsung has also emerged as Apple's toughest competitor in the smartphone and tablet market.
Apple faces several hurdles should it want to make a switch to TSMC, including patents and chip design issues as well as a push by Samsung to retain the business.
"Apple is trying to diversify its orders but it will still maintain some kind of relationship with Samsung," said Fubon Securities analyst William Wang.
"I think TSMC will get the new chip orders, the issue however is allocation. Apple won't give the whole 100 percent to TSMC. Maybe it'll allocate only 20-30 percent."