With Samsung's Galaxy S4 launch just hours away, and its alternatives already being out there, iPhone 5 could begin to look out of place. Apple's agenda for Spring-Summer 2013 includes an iPhone refresh, which could bear the model name iPhone 5S. As with the iPhone 4S, the refresh should include a hardware update, but in this case, a new SoC (system-on-chip), the brains of the device, may not be part of the package.
According to a DigiTimes report, Apple's next big chip, the A7, is on the verge of a tape-out, by the end of this month. TSMC is the chosen foundry partner, and Apple reportedly settled on its 20 nanometer silicon fab process. TSMC's 20 nm node is still under development, and can only ship tiny quantities of chips for product design, development, and qualification purposes. It will be able to ship production quantities of chips of any kind on the node only by the first quarter of 2014, which is how long it could take for Apple devices to feature a major hardware update. A tape-out is that stage of development of a new silicon, when a semiconductor foundry ships designers small but sizable quantities of their chips that are working-prototypes, and can be used to build devices on. Think of it as "beta" for hardware.
On the other hand, there are rumors of Apple working on a cost-effective iPhone product for the masses, which is based on the same iOS ecosystem as most other Apple products, but with cost-effective hardware, such as SoC sourced off-the-shelf from Qualcomm's product stack. Perhaps Apple realised that the only way iOS can comprehensively compete with Android is addressing all device price-points.