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Apple looks to eliminate reliance on its bitter smartphone rival

Embroiled in an international patent dispute, Apple, Inc. (AAPL) is looking to drop the "friend" bit from its "frienemy" relationship with Samsung Electronics Comp., Ltd. (KSC:005930).  The world's top two smartphone makers, the American and South Korean electronics firms have seen an increasingly belligerent relationship in the smartphone industry; and yet they still are bound by a close tie. Apple pays Samsung to manufacture the semiconductor chip "brains" of its mobile devices.

But Apple is working hard to dump Samsung.  Reports came on Wednesday that Apple was shifting contracts for its fourth generation iPad's A6X system-on-a-chip (SoC) to Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330).  The news was first reported in the Commercial Times.  The report was later picked up by the AFP and other international outlets.

In 2012 Apple and Samsung are estimated to have done $12B USD in business together.  However, as Apple shifts contracts to other chipmakers like TSMC that number is expected to dwindle.
 
2013 should still see large payments from Apple to Samsung.  The TSMC production of iPad SoCs won't even hit the trial phase until sometime this quarter, and likely won't reach volume until the middle of the year if all goes well.  And there's no guarantee all will go well; Apple previously looked to shift away from Samsung only to see those efforts reportedly stymied by poor results from TSMC.


Samsung should also be able to soften the blow of any lost business from Apple with its increasing relationship with Qualcomm Inc. (QCOM), maker of the Snapdragon SoC line which sees frequent use in Android and Windows smart phones/tablets.  While Apple is fleeing Samsung due to external factors, Qualcomm appears to be moving away from TSMC directly due to its yield performance.  Of late Samsung has begun to produce Snapdragon S4 chips for Qualcomm, a contract which TSMC was originally expected to exclusively supply.

Some reports have indicated that Samsung may look to punish Apple for its $1.05B USD patent infringement victory against it by raising prices on i-device SoCs.  However, other reports dispute these claims.

Source: AFP [on Asia News Daily]



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RE: Some more data
By ritualm on 1/2/2013 2:18:16 PM , Rating: 2
Apple is a grandmaster at putting the proverb "Cutting the hand that feeds them" in practice.


RE: Some more data
By name99 on 1/2/2013 2:37:36 PM , Rating: 2
Really? Name for us a supplier that Apple screwed over that DIDN'T engage in the sort of behavior that Samsung engaged in?


RE: Some more data
By retrospooty on 1/2/2013 2:49:21 PM , Rating: 2
I am not sure what your point is, but how does "screwed over" come into play?

What he is saying above is that Samsung is a top level supplier and Apple cutting changing the supplier for political not production reasons and it may not work out so well. TSMC has yield issues, especially when starting new products.


RE: Some more data
By name99 on 1/2/2013 5:10:57 PM , Rating: 2
I replied to the statement
quote:
Apple is a grandmaster at putting the proverb "Cutting the hand that feeds them" in practice.

This statement implies
(a) that Apple has FREQUENTLY treated suppliers badly and
(b) that it did so without provocation.

Your reply does nothing to validate these claims. Samsung is not the issue here --- Samsung is a sample of one (ie not FREQUENT) and did provoke Apple.


RE: Some more data
By unimatrix725 on 1/3/2013 4:16:43 PM , Rating: 2
Apple has billions in "cash on hand". Why not pay TSMC or Global Foundries for a dedicated line? Do the usual back scratching like our government does. Knowing Apple it is not all that far fetched to buy one of them or even make a chip plant? They need not have a huge fab plant, unless they are so vengeful to fully un seat Samsung?


RE: Some more data
By ritualm on 1/3/2013 5:25:07 PM , Rating: 2
Apple already tried. TSMC said they will not take the money to build an entire chip production line dedicated to everything iCrapple.

Also, running a foundry easily costs many, many billions of dollars just to keep it current and profitable. The magnitude of complexity is far above what Apple's doing with its hardware manufacturing, which is to outsource all hardware manufacturing to Foxconn and others.


RE: Some more data
By Cheesew1z69 on 1/3/2013 7:14:26 PM , Rating: 2
quote:
They need not have a huge fab plant, unless they are so vengeful to fully un seat Samsung?
Will and would never happen. Period.


RE: Some more data
By unimatrix725 on 1/4/2013 3:01:07 AM , Rating: 2
Apple bought P.A. Semi and Intrinsity and now tunes/tweaks their own arm based arch, which Samsung makes for them. Samsung wasn't up to snuff in that area. A long time ago they were in the PPC Alliance. More similarities with arm and ppc based chips (RISC). They might as well buy AMD and ARM Holdings to round out their desktop based icrap line too.
That would take care of all mobile and desktop chips including video (If AMD/ATi). The rumors of a real Apple TV also. They would have an excellent fab and possibly take on some new business from others. Talk about massive profits, more than even now!
Granted the costs could make or break them as yes Fabs are expensive all around.
Considering rumors of Apple and Intel having differences. Now the sh*t storm with Samsung. Mind you they got pawned +~20% increase in the new contract on the supply of chips from Sammy. I would guess to cover the loss from the lawsuit if Apple does win.

I would not be surprised if Apple jumps in bed with Micro$oft in such a venture. Considering Micro$oft is practically a troll in the phone arena. They bring in most of there money from "Licensing deals with Android Handset makers". That would be a good way to leverage Nokia into Apples New Fabbed Chips, whatever they may end up being. Apple can still learn a few things from MicroShaft, as bad as I hate to say that.

It is the same old game just new players. Anyone remember back in the day of Micro$oft against Apple. Just swap one name with Google. Then Apple would be a true monopoly.
There is a true advantage to owning the supply chain over commanding/controlling one. If enough effort was put forth perhaps Sammy may one day have to have Apple Fabs print those Exynos chips..... lol
“I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion (Currently 121B 12/03/2012-Google) in the bank, to right this wrong…I’m going to destroy Android…I’m willing to go thermonuclear war on this.”
LOL LOL


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