Samsung Takes Hit as Apple Partners with TSMC for iPhone, iPad Chips
July 1, 2013 1:11 PM
Samsung will now fill the void by making chips for the likes of Qualcomm and even for its own products
If Apple and Samsung's turbulent relationship was made into a soap opera, this episode would feature continued
separation between the two
and Apple's "other lover."
Apple recently signed a new supply deal with Taiwan Semiconductor Manufacturing Co. (TSMC) for iPhone and iPad chips. These orders from Apple will reportedly account for 8 percent of TSMC's 2014 total revenue if Apple buys 30 percent of its chips there, according to Credit Suisse analysts.
If Apple bumps this up to 60 percent in 2015, it will make up 15 percent of TSMC's revenue for that year.
Apple has been distancing itself from Samsung due to competition between Apple's iPhone and Samsung's Android-powered smartphones (such as the Galaxy line). The two have also had an ugly patent war that has soured relations over the years.
Apple's new deal with TSMC isn't great news for Samsung, but it will likely fill the void by making chips for the likes of Qualcomm and even for its own products.
[Image Source: Nerd Array]
At the Consumer Electronics Show (CES) back in January, Samsung's President of LSI business Stephen Woo said that it's crucial for the South Korean electronics maker to focus on
alternatives to Apple
when it comes to the chip sector. In fact, Samsung has been supplying Exynos quad-core chips to Chinese smartphone company Meizu and also to Lenovo's K860 LePhone.
According to Goldman Sachs, Apple will purchase about $8.8 billion USD worth of chips from Samsung this year, which is about 80 percent of Apple's allowance for processors, memory chips and screens. But Apple is expected to move 30 percent of its business away from Samsung next year and about 80 percent by 2017.
It's unlikely that Apple will give all of its chips business to TSMC, since it doesn't want to put all of its eggs in one basket. TSMC will begin supplying the processors in early 2014.
Chips aren't the only hardware Apple and Samsung are phasing out in their relationship. Samsung Display, which has provided Apple with
liquid crystal display (LCD) panels
for its iPhones and iPads over the years, officially severed its contract with the iDevice maker last fall. Samsung cited cost as the main issue, since Apple has started using Samsung competitors with better prices for displays. Hence, Apple was expecting bigger discounts from Samsung.
The Wall Street Journal
"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)
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