Apple breaking up with Samsung as components supplier, embracing the TSMC foundries

Apple breaking up with Samsung as components supplier, embracing the TSMC foundries
Numerous industry sources point to Apple trying to get away from what is turning out to be its biggest competitor instead of a mere components supplier, Samsung.

The move seems to be already underway, with the Taiwanese TSMC foundries picking up the slack, and likely to receive the orders for the A6 chipset next year, when Apple is expected to break up with Samsung completely.

The Koreans were still making the A5 chipset in the iPad 2, the flash memory bits, as well as other components for Apple, before the legal battle between the two companies began, but Cupertino is looking for alternative shops on all of these, and we bet it can't wait for the contracts to end.

TSMC is a contract fab, which can produce with the 28nm process, paving the road for the faster and more power-efficient A6 chipset next year, while the A5 is still made with the 40nm technology. There is always Intel, of course, which has expressed interest in having Apple's business with its 22nm newfangled 3D transistor process, but it still has to prove its viability before Apple's ARM-based chipset designs.

Apple is a huge customer, so its split with Samsung won't go unnoticed, but manufacturing chipsets is quite a low margin business, so it's unlikely that Samsung will be severely wounded, plus such a move should have been expected in light of the legal skirmish between these two. This also means that the probability to see a Super AMOLED type display in the next iPhones is quickly approaching zilch.

via ArsTechnica

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50 Comments

1. biggles

Posts: 269; Member since: Oct 15, 2009

No Super AMOLED HD for the iPhone. Suck it, Apple! Samsung will own the smartphone market by this time next year. Better hardware, better software.

11. cheetah2k

Posts: 2297; Member since: Jan 16, 2011

I don't think Samsung will own the smartphone market next year, but in terms of quality, Samsung will own the crown. With Apple, we seem to pay more for less, and now they are sure to reap more $$ per handset with much cheaper components. Money money money.. Thats all Apple is about.

13. 530gemini

Posts: 2198; Member since: Sep 09, 2010

How's bada doing? I heard it totally conquered the smartphone OS :)

14. 530gemini

Posts: 2198; Member since: Sep 09, 2010

I know. I guess the iphone will be stuck with their poor retina display with its unmatched sreen resolution :) Poor Apple.

48. biggles

Posts: 269; Member since: Oct 15, 2009

Except that Super AMOLED HD will be 720 lines of resolution, with a 4.3" screen to boot. Maybe Apple will bump their 3.5" screen resolution to 1280, giving you even more lines of resolution your eye can't perceive.

21. - unregistered

Better software? I hope you're joking. Android is a mess.

49. biggles

Posts: 269; Member since: Oct 15, 2009

Says who? Android is just fine, without the limitations and stale design of iOS. Like I said, better software. Put a fork in Apple.

2. nuadar unregistered

Wow...I guess Samsung can fully focus to processors and samoled screens for its devices.... I kinda wonders how will Tsmc handle sooo big commission...

50. biggles

Posts: 269; Member since: Oct 15, 2009

Make no mistake about it. Apple's suppliers get slim margins. I'm sure TSMC will appreciate the volume, but the lion's share of the cash made on the iPhone doesn't leave the coffers in Cupertino.

3. snowgator

Posts: 3621; Member since: Jan 19, 2011

Apple is really rolling the dice on this one. The old cliche of not messing with success comes to mind. I do not know who started this rock/paper/scissors war between these two, but Samsung doesn't depend on Apple for much of anything but working capital. I am sure Apple has had this playing out behind closed doors for a while now, and are prepared as they can be. But the one thing no one could ever fault the iPhone on was quality. Their handsets are very well put together, and easily last the term of any 2 year contract. Samsung was a part of that. Hope it doesn't take a hit.

15. 530gemini

Posts: 2198; Member since: Sep 09, 2010

Let's see. Samsung will lose millions from the break up. How much will Apple lose? Zero, and they can easily find a replacement with better technology. So I guess you're right. Apple will lose :)

19. Matt unregistered

Samsung just bailed out Apple since LG who make the displays for the iPad 2 had a problem with their displays which caused light leakage so Samsung came to the rescue. Samsung makes its own hardware and gets free software from Google who are kind of close partners since they are one of the biggest companies now pushing the android platform as well as being the most competitive. If Apple drop Samsung completely then they also fail because there arent as many other companies who can produce at such a high scale which means Apple doesnt have as much bargaining power with the others that do. Samsung had a huge demand for the Amoled displays so much so that in some countries they had to release the Galaxy S with a super LCD display as they had a shortage. They wont be short for customers any time soon. Apple leaving will not hurt much.

25. 530gemini

Posts: 2198; Member since: Sep 09, 2010

I didn't know that Samsung is the only company that can make lcd displays. Wow. I guess there won't be anymore iphone5 and ipad3 :) You should celebrate then. Coz according to you, no one can make good quality lcd's for Apple anymore. Samsung is just so awesome :)

51. biggles

Posts: 269; Member since: Oct 15, 2009

The Galaxy S2 sales have taken off. Much like HTC went elsewhere because of Samsung's limit on export of AMOLED, Samsung is more concerned with capacity for the Exynos processor. They could not be bothered tieing up their manufacturing line with A5/A6 production where the margins are much more slim. I hope TSMC's costs aren't higher than Samsung's and that their quality is up to the same levels, or Apple has plenty to lose.

4. remixfa

Posts: 14605; Member since: Dec 19, 2008

So without samsung being the driving force behind "Apple's" chipset design, i wonder how it wil affect future devices. Hopefully samsung starts liscencing out Hummingbird and Exynos chipsets to everyone now that Apple isnt going to have an exclusive on them (other than sammy of course)

16. 530gemini

Posts: 2198; Member since: Sep 09, 2010

Oh so now Samsung has been the driving force of Apple's success. Not its marketing. Lol. Hmmmmm. So what will you say if the iphone5 and the ipad3 proves to be another bestseller by the end of this year? That's when you'll go back to saying that marketing is Apple's driving force to success, right? Lol. Btw, which part of "TSMC is a contract fab, which can produce with the 28nm process, paving the road for the faster and more power-efficient A6 chipset" did you miss? :)

35. remixfa

Posts: 14605; Member since: Dec 19, 2008

learn to READ gemini. I said "Driving force behind apples CHIPSET DESIGN" not SUCESS... lol. And yes, those powerful chipsets are part of their sucess, but thats not what i was talking about. :)

38. 530gemini

Posts: 2198; Member since: Sep 09, 2010

Oh ok. Since Samsung is not behind's Apple success, then I guess Samsung is not Apple's loss at all :) Btw, I thought Apple designed the A4 chipset and they paid Samsung to put it together. So it's Samsung then? Wow.

41. remixfa

Posts: 14605; Member since: Dec 19, 2008

The A4 is a renamed Hummingbird chipset with a slightly lower adreno gpu.. (adreno 200 or 205 i think) than the hummingbird found in the galaxyS. This is pretty common information at this point. Why is it apple fanboys think that Apple makes all this crap? lol. The iphone4 is all samsung on the inside, all LG on the outside, with the only truely thing designed by apple (other than the design) is the antenna. And man what a great antenna design they put on that thing.. lol. If thats an indicator of what they would do if they actually DID design their own chipsets, then watch out world! "no, the phone processes fine, your just holding it wrong!" Sarchasm aside... what the hell are you talking about? lol "samsung is not apple's loss"?? If you had to go from the guy that makes and designs the number 1 chip to a guy noone has heard of and a new chip designer, id say you possibly have a "loss". Of course, who knows how this will turn out. wont know till the phones are launched on a wide scale.

44. 530gemini

Posts: 2198; Member since: Sep 09, 2010

Oh ok. I get it now. A4 is a downsized samsung chip for Apple. Makes more sense now :) Thanks for letting us know that the iphone is actually LG's and Samsung's product. How much did Apple pay Samsung to make iOS? iOS is really bada then huh? It's just renamed by Apple to iOS :) Oh ok, I take it back. Samsung now is a big loss for Apple, right? So you think the ip5 and the ipad3 will even sell less huh? Poor Apple :)

47. remixfa

Posts: 14605; Member since: Dec 19, 2008

wow, ur stretching what people are saying farther than taco can.. lol at what point did i say anything about iOS, i was talking about hardware, not software. If you cant come to terms with the fact that apple outsources all its hardware needs to other companies, thats on you.

55. 530gemini

Posts: 2198; Member since: Sep 09, 2010

Oh but isn't software internal? :) Oh I totally agree that Apple outsources all their hardware. They never produce anything, remember? :)

53. biggles

Posts: 269; Member since: Oct 15, 2009

Samsung is bigger than Apple ever will be. Apple operates in a niche space and they no longer have the market cornered in smartphones. They won't keep up with the technology pace but will continue to sell at a premium which means they've pretty much leveled off. The iPad is headed down the same path. Don't worry your little self. It's inevitable. It is what Apple wants to be. Try not to deny it.

56. 530gemini

Posts: 2198; Member since: Sep 09, 2010

You're absolutely right. Samsung is worth way more than Apple will be. You are so smart. Apple will never keep up with technology because they really don't own any, right? :) But why do you say that they would continue to sell though? They have poor tech, right? :)

52. biggles

Posts: 269; Member since: Oct 15, 2009

Somebody is sure full of themselves. All fabs aren't created equally. Changing suppliers always comes with A LOT of risk, particular when you had a good thing going previously. Just because Apple has their finger on it, doesn't automatically mean it's gold.

57. 530gemini

Posts: 2198; Member since: Sep 09, 2010

Risks? Like what? Obviously you know way better than Apple. You probably make more than Apple as well because you're just so smart :) So you think that Apple should stick with Samsung getting downgraded lower quality chipsets like remix said? Did you say Apple had a good thing going? I thought Apple is a big failure? Hmmmmm.

5. messiah

Posts: 438; Member since: Feb 19, 2010

lawsuits will divide even the most bitter of rivzals.... oh, wait.... are we surprized it went this long????

6. AndroidTroll

Posts: 359; Member since: Mar 05, 2011

This marks the beginning of the end of apple. Woohoo!

17. 530gemini

Posts: 2198; Member since: Sep 09, 2010

You've been marking the end of Apple in the last 5 years, lol.

23. xenover

Posts: 174; Member since: May 27, 2011

it will come sooner or later anyway :)

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