Feature Article

March 11, 2014

Apple Recruits TSMC for Chip Production, Reduces Samsung's Role

It seems that no matter what they do, Apple and Samsung are inextricably linked in one way or another. At the most basic level is the fact that the two companies together dominate the smartphone world, whether in terms of market share or profits. In fact, it seems that Apple and Samsung’s smartphone success is the underlying tie that binds them.

That said, it isn’t like either company — Apple especially — to just give in; it’s because of this that the companies are still locked in a world-spanning legal battle based on patent disputes, after all.

Apple is taking the battle beyond the courtroom, though, and to the production line. Specifically, the company has reduced Samsung’s role in the development of its A-series chipsets.

Up until recently, Samsung was the sole manufacturer of its rival’s custom mobile processors, a situation that was at once awkward and mutually beneficial. However, Taiwan Semiconductor Manufacturing Company (TSMC) has signed a partnership deal with Apple to manufacture roughly half of Apple’s next generation A8 chips, significantly reducing Samsung’s role in Apple’s business.

This move has been in the works for some time, but has proven difficult to act on. After all, few companies can manufacture ARM-based chips at the same level as Samsung, which is why the Korean electronics giant is still being kept on. That said, this could be the beginning of the end for Apple and Samsung’s processor partnership. Obviously, that all depends on how TSMC performs in the coming months and years.

Some reports have suggested that Samsung is running short of Apple’s demand for A8 processors, which led to Apple’s decision to involve TSMC in chip production. A Samsung source has since stated that these supposed manufacturing issues were exaggerated, though.

Apple’s new A8 chip will succeed the A7 processor found in the iPhone 5S and will likely appear in the iPhone 6 when it launches later this year.

Edited by Cassandra Tucker

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