As predicted, Apple, Inc. (AAPL) is looking to distance itself from one of its top suppliers -- Samsung Electronics Comp., Ltd. (SEO:005930).  

Samsung is one of three top Android smartphone makers.  Getting outsold two-to-one by Android, Apple has sued all three of the top Android smartphone makers including Samsung.  Apple claims that Samsung and other Android makers both ripped off its technology and its patented thin-black rectangular design.  Samsung responded with countersuits.  

The growing legal war has created a bitter divide between the firms and put Samsung's status as one of Apple's top chips suppliers in jeopardy.  Apple is the largest single buyer of Samsung liquid crystal displays.  It also relies on Samsung for DRAM chips (iPad) and CPUs (iPad/iPhone).

According to a Reuters report, the Taiwan Semiconductor Manufacturing Company (TPE:2330) has begun trial production of the A5 CPU found in the iPad 2, in a move that clearly signals Apple's desire to drop Samsung.

However, according to the report, Apple may find doing so difficult.  Samsung helped design the A5, reportedly, and holds key patents on some of its technology.  Also, TMSC may have difficulty replicating the design without defects.  Lastly, despite the companies' awkward relationship, Samsung is actually trying to convince Apple to keep it as a supplier.

Fubon Securities analyst William Wang is quoted as saying, "Apple is trying to diversify its orders but it will still maintain some kind of relationship with Samsung. 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." 

TMSC is an attractive replacement, though.  The company is the world's top contract chipmaker.  It also has extensive experience working with British architecture firm ARM Holdings Plc. (LON:ARM), which makes the underlying architecture for virtually all smart phones and tablets on the market.  TMSC has also just completed a $7.8B USD expansion of its production facilities, including developing new process technologies.

Apple reportedly hopes to go exclusively with TMSC for its next generation CPU.  While the last two generations were named the A4 and A5, respectively, Reuters reports that the next gen CPU will bear a different a non "Ax" branding.

Seo Won-seok, an analyst at NH Investment and Securities in Seoul, South Korea is doubtful that TMSC will earn the majority of the chip production contract, though.  He states, "It won't be easy for Apple to dramatically change its chip provider from Samsung. It has to redesign the chipset, which Samsung has been deeply involved from the beginning and has some intellectual property. Apple could try various suppliers but they (Samsung and Apple) need each other and the relationship will continue."

Nobody knows for sure what will happen, but the unfolding drama is fascinating to watch.  Even as Apple and Samsung directly vie for the top spot in global phone sales, the pair will continue their tug and pull behind the scenes with regards to their customer-supplier relationship.  Apple may try to ditch Samsung, but the Asian chipmaker will seek to make America's largest single phone maker an offer too compelling to refuse.