Samsung Now Making Apple's Smartphone/Tablet Chips in Texas
December 16, 2011 1:01 PM
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Despite the pair's eroding relationship, the brains of every Apple product are still made by Samsung
Like Felix Unger and Oscar Madison, Apple, Inc. (
) and Samsung Electronics Comp., Ltd. (
) are the real world's corporate "odd couple". Samsung is
the world's top smartphone maker
, outselling Apple over 3-to-2 at last count. Apple is the world's largest tablet maker, outselling Samsung by an even larger margin. And both companies are locked in an international legal war -- initiated by Apple in 2010 -- which has swept the globe to encompass over 80 separate lawsuits or trade court complaints [
And yet despite the company's apparent disdain for each other, Samsung continues to
dutifully make the "brains" of Apple's tablets and smartphones
, while Apple begrudgingly depends on the South Korean electronics giant's aid.
I. The Apple A5: Now Made in America (by Samsung)
The pair's odd relationship was in the spotlight, following a
that reveals that the production of the A5 CPU found in the iPhone 4S and iPad 2 has shifted production to Samsung's new Austin, Texas facility. The 1.6 million square foot (about the size of nine football fields), $3.6B USD new factory is only Samsung's second non-memory chip fab, with the other being in South Korea.
The Brains of the iPhone are currently made at Samsung's new Austin, Texas factory.
[Image Source: iFixIt]
The new chip fab reached full production in early December, with a reported yield of 40,000 wafers a month. It employs 1,100 workers, many of them engineering graduates from the local University of Texas' engineering school.
The facility is a sister site to Samsung's neighboring NAND flash memory chip fab, which opened in 1996 and employs 2,400. Apple and Samsung could almost be holding each others hands under the table, as Apple is right next door with a thousands of employees customer call center that deals with customer complaints in North America, Apple's biggest market.
It's not all flowers and roses for the pair, though. While Apple still relies on Samsung for its CPU chip-making expertise, according to
recent tear-down reports
Japan's Elpida Memory, Inc. (
) is now making the chips in some of Apple's iPhone 4S models. And those reports also indicate that Apple,
as previously reported
, has made a full transition from Samsung NAND storage to Toshiba Corp. (
) NAND chips.
But for now Apple and Samsung are still forced to endure their standoffish coexistence as coinhabitants of the same residences -- the iPhone 4S and iPad 2.
One final aspect to note is that some will be refreshed with the change of scenery of a top smartphone maker buying chips from an American fab. This is particular true given Apple's long history of relying on cheap Asian manufacturing capacity to build its products, having mostly turned its back on American manufacturing long ago.
II. Report: Apple is Opening New R&D Facility in Israel
In related news Apple is also
to building a semiconductor-focused research and development center in Israel. Reportedly Apple scored a coup in hiring hot Israeli high-tech veteran Aharon Aharon, who began his career at International Business Machines, Inc. (
) before going on to top leadership roles with several large and successful Israeli tech firms [
Apple is also thought to be
closing in on acquisition of Israel's Anobit
for around $400M-$500M USD. Anobit makes the flash memory controllers found in Apple's mobile devices and holds valuable patents on extending the life of failure-prone MLC flash memory.
While Apple is called a "global innovator" by many analysts, it's among one of the most stingy of the large technology firms when it comes research and development. In 2010 it reinvested a mere 2 percent of revenue -- or about $2.4B USD -- in R&D, according to company financial documents.
Apple admittedly relies heavily on its competitors for product inspiration. Late company co-founder and CEO Steven P. Jobs infamously bragged, "Picasso had a saying - 'Good artists copy, great artists steal.' And we have always been shameless about stealing great ideas."
The top American tech firm is aided by its powerful legal staff, who have a penchant for cajoling global patent offices into
granting them patents on seemingly obvious software features
that are almost trivially different from designs that have been on the market for years.
The company is rather brilliant, though, in its ability to thus far use its supplier relationships, rather than actual research and development, to "out innovate" its competitors.
For example, Apple was the first company to mass-deploy minimalist multi-touch smartphones and tablets, later
admonishing its competitors in court
for "copying" its design post-mortem. Our sources and past reports suggest that companies like Samsung were exploring similar multi-touch products to the iPhone back in 2007, but that Apple simply beat them to the punch, convincing the sole supplier (at the time) of thin multi-touch displays to sell all of its stock to Apple.
The move ensured that competitors could not put a similar product out on the market for over a year. At the same time, Apple was granted a
patent on multi-touch gestures
which had been
published in peer-reviewed literature
almost 20 years before, but which Apple had ported to the smart phone.
Apple's approach of innovation through supplier relationships, patenting other peoples' technology, and then using those factors to outsue and outsell its competitors has been an approach that has infuriated its rivals. But it's hard to argue with the results -- Apple is now vying with Exxon Mobile Corp. (
) for the distinction of being the
world's most profitable company
. Apple's critics may call its strategy diabolical, but if it's indeed diabolical it's certainly very good at being diabolical.
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RE: Oh come on...
12/18/2011 7:11:49 AM
You really like living in the past don't you ;)
You have talked before about the special mystical power of Microsoft that means that as it shrinks in importance and as Apple pulls far ahead of it in every business metric it retains some sort of special place in the universe that is bigger than Apple and will always be bigger than Apple. I presume such thoughts make you feel better. I just can't see it myself.
I wonder what the future trajectory of each company will be? Here is a clue: Apple's financial results for this quarter are going to be a good indicator of the future.
RE: Oh come on...
12/18/2011 8:23:24 AM
As opposed to living in denial?
Clearly you have no understanding of how insignificant Apple are within business.
Early this year they discontinued their XScale line of rack-mounted servers, solidifying their commitment to business application.
Whilst the iPhone may be growing in business adoption, there are viable alternatives that could easily be used instead that would have no impact upon the business. Can you name me a true alternative to Microsoft Small Business Server for small/medium size businesses?
Can you name me a true, affordable alternative business operating system that is fully integrated for self as well as centralised management?
Your silly dream of self management is absurd. You've clearly never worked in IT. Collaboration of information, files, ideas, security, productivity, communication always have, and always will rely on centralised management of IT systems. Do you really think that each node becoming its own email, file, print, management, name server is viable? You're an absolute fool. The best product and the only viable option for many businesses, that caters to all if the aforementioned needs, and much more, is the Microsoft Windows and server products. Nothing else comes close.
Your view is far too engaged in the general consumer outlook. You're unable to open your mind any further because you're unable to fathom the true complexities of I.T infrastructure. You've used Windows at work and hated it. For all you know the infrastructure could have been built on Linux. I've seen many a company run their back end through a half baked Linux mess, having a profound negative effect in the performance and reliability of their Windows nodes. Just because the IT department at your place of work were crap, that doesn't make all I.T administrators, all configurations and infrastructures based on Microsoft's products bad. That's your own personal experience based upon your own place of work. That doesn't account for the millions of other infrastructures and administrators, does it? Your view is like that of a child. Grow up.
I'm all for making the experience more pleasant for the end user. Self management is the exact opposite of that.
RE: Oh come on...
12/18/2011 8:25:26 AM
Sorry, that should be XServe, not XScale.
RE: Oh come on...
12/18/2011 9:56:10 AM
Way to dodge the question and inject another "Apple is earning mounds of cash so it is more important than anything" argument there, Swashie.
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