A series of reports surfaced earlier this week suggested stock for AirPort Express, AirPort Extreme stations and Time Capsule units was running low at several Apple retail locations in the United States, with a separate source confirming to us that Apple Stores in Canada have seen similar shortages for Express and Extreme devices. Speculation arose quickly claiming that Apple could release new versions next week, during WWDC, with an announcement likely set for Monday’s keynote. Amidst the rumors, many pointed at the Time Capsule receiving an important update to enable advanced caching functionalities for software updates — the Time Capsule would recognize known devices on a network, check for software updates available, download them in the background, and later seed them to all devices in a few seconds without having to wait for a download process. Others also speculated this caching feature would allow users to store portions of iCloud media locally to avoid streaming delays and pauses between songs or movies.

In a separate report, Ars Technica briefly mentions [via MacRumors] the new Time Capsule could run the A4 or A5 chip alongside iOS — perhaps a modified version much like the second-generation Apple TV.

The source didn’t mention any new functionality for Apple’s AirPort Extreme base station, but it is possible to connect an external USB drive to those devices, which then function similarly to a Time Capsule. It seems likely that Apple could enable updated AirPort Extremes to do similar caching when an external drive is connected.

Our own source tells Ars that the revised hardware is believed to be built around Apple’s own A4 or A5 processor, and will run iOS much like the most recent Apple TV model.

A Time Capsule running iOS and capable of caching content for other devices would certainly open to the possibility of iPhones and iPads connected to iCloud but also deeply tied to the local network to increase streaming speed (thanks to cache) and overall quality (higher-quality songs could be cached locally as snippets so iOS devices wouldn’t take long to fetch the remaining portions).

Speculation also suggests an iOS-based Time Capsule could be used for a much broader set of functionalities such as serving content to Apple TVs or enabling additional options in Lion’s AirDrop — though it also needs to be considered that, by making these possible features exclusive to the Time Capsule (and, say, not a server app running on a Mac), users would be forced to purchase a $299 device (current Time Capsule 1 TB) to enjoy all the potential of iCloud and iOS 5.

Following the various teardowns of the iPad 2 we saw last week, Chipworks decided to take a closer look at the Apple A5, the dual-core processor that powers the iPad 2 and contributes to its impressive gain in speed and performance. Whilst Chipworks’ teardown isn’t something the average Apple geek would be able to fully appreciate (there’s some highly technical stuff in there, like microscopes and layers of aluminum being closely inspected), there are some interesting points worth mentioning.

By looking at the internal structure of the A5, Chipworks concludes it was manufactured by Samsung in spite of the rumors suggesting Apple would go with TSMC due to the competition arisen with Samsung in the cellphone and tablet market.

At  this scale even electron microscopes start to run out of steam, so not the clearest of images in either case, but good enough to see the similar shape of the transistor gates and the dielectric layers.  So at least this sample of the A5 is fabbed by Samsung, just as all Apple’s processor chips have been for the last while.

Other notes by Chipworks include the ARM cores with ~4.5 Mb of cache memory each, and the A5 being roughly twice the size of the old Apple A4 chip from the iPad 1. Just in case you had any doubts about the performances guaranteed by the A5, this teardown is here to confirm that Apple went with Samsung once again to produce a chip that’s twice the size, dual-core and optimized for a tablet’s battery life. [via TUAW]

A second report from Digitimes this evening suggest that Apple might outsource the production of the A4 chip and the rumored Cortex-A9-based A5 to Taiwan Semiconductor Manufacturing Company, TSMC. Apple is reportedly concerned about leakage of production techniques and specs now that Samsung is directly competing with them in smartphone and tablet market, and TSMC already provided A4 production when Samsung was unable to meet demand last year.

Apple is reportedly looking to outsource the production of its A4 processor as well as the next-generation ARM Cortex-A9-based A5 processor to Taiwan Semiconductor Manufacturing Company (TSMC), according to industry sources. The Apple A4 processor is currently exclusively produced by Samsung Electronics, and the previous S5PC100 used in the iPhone 3GS was also developed and manufactured by the Korean company.

TSMC declined to comment on the report.

Digitimes also reports the iPad 2 will feature an “enhanced” version of the A4 chip, while the iPhone 5 will come with the brand new Apple A5 processor. A number of reports surfaced in the past indicated Apple was working on a CPU for the next iPhones and iPads, although it is unclear at this point which one will get the new A5. Several pundits also speculated Apple will adopt dual-core processors and implement RAM up to 1GB in the iPhone 5, which will likely come with a universal GSM / CDMA antenna as well.