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South Korean chipmaker will reportedly make the majority of its rival's next-gen CPUs

Samsung Electronics Comp., Ltd.'s (KRX:005930) (KRX:005935) semiconductor division was embarassed when it was bumped to backup supplier status when it came to producing Apple, Inc.'s (AAPL) A8 processor, found in the iPhone 6/6+.  Apple and Samsung compete in the devices market, but Apple chip orders also help to drive Samsung's profit, so this snub was a key hit to Samsung financially.

The winner in this case was Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330) who reportedly is filling roughly 70 percent of Apple A8 orders, with Samsung producing roughly 30 percent of the chips.

But it appears that Samsung's Semiconductor division is fairing better with the next iPhone and its processor, the Apple A9.  According to a report in The Korean Times, Samsung has secured orders to produce most of the iPhone 4's system-on-a-chip (SoC) units, memory, and solid state storage chips.

Apple A9
[Image Source: iPhone Mockup/DailyTech (minor modifications)]

On the process front, Samsung reportedly bumps TSMC back to a backup role, fulfilling an estimated 70 percent of Apple A9 orders.  As the Apple A9 is reportedly built on a brand new 14 nm process, that hints that Samsung may be leading TSMC in volume production and defect elimination on the 14 nm node.

TSMC -- wide
[Image Source: Cult of Mac]

The report also claims that in addition to the SoC win, Samsung's LPDDR4 DRAM memory chips and NAND flash storage single-package chip solutions will bump Toshiba Corp. (TYO:6502) and Micron Tech. Inc.'s (MU) (and its subsidiary Elpida's) rival offerings out of more than half of the next generation iPhones.
According to the report, Samsung's new ePoP (embedded package on package) design -- which stacks the NAND flash storage and LPDDR4 DRAM memory into a single chip package -- was particularly critical to winning this new business.

Built on 20 nm process, the LPDDR4 chips inside Samsung's latest ePoP offering consumes 40 percent less power and 1.1 volts than its 20 nm LPDDR3 chips.  And they're also twice as fast as the LPDDR3 predecessors, with a max throughput of 3,200 Mbps (Megabits per second) per pin (400 Kbps/pin).  The chips are also more dense; where each die of LPDDR3 packed 4 or 6 Gb worth of RAM cells, the new LPDDR4 chips pack 8 Gb per die.
Samsung ePoP
Samsung has been perfecting ePoP technology to win these kinds of orders.  ePoP stacks memory and storage chips into a single package. [Image Source: Samsung]
 
Samsung faced a tough struggle getting ePoP to market, given thermal, electrical, and fragility issues that plagued the technology.  But as Samsung highlights in a late 2013 slide deck, it has developed solutions to all these issues.  With these solutions reaching maturity, ePoP chip stacks appear poised for primetime in Samsung and Apple's flagship smartphones.

Samsung ePoP -- thickness issues
Samsung thermal issues -- ePoP

Samsung PoP issues

Samsung memory EVP Young-Hyun Jun expressed confidence in a Dec. 2013 press release that the LPDDR4 chips would bump out Toshiba and others in future orders, stating:

This next-generation LPDDR4 DRAM will contribute significantly to faster growth of the global mobile DRAM market, which will soon comprise the largest share of the entire DRAM market.  We will continue introducing the most advanced mobile DRAM one step ahead of the rest of the industry so that global OEMs can launch innovative mobile devices with exceptional user convenience in the timeliest manner.

Samsung's current LPDDR4 offerings come in 2, 3, and 4 GB variants, with each GB representing one chip in the stack.  These can be combined with Samsung's upcoming ePoP offerings which will carry 32, 64, 128, or even 256 GB of NAND flash storage.

Assuming this report is true, it represents a major comeback for Samsung Semiconductor, and a disappointing hit for Toshiba, TSMC, and other rival suppliers/fabs.  The deal sounds like a win-win for both Samsung and Apple, but will be especially salient to the former firm, given its recent struggles with profitability.

Sources: The Korea Times, via GSMArena





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