Neil Hughes
To date, Samsung has been the sole supplier of custom A-series processors for Apple's popular iPhone and iPad, but industry watchers again expect that to change after the South Korean company signaled that its microprocessor business has a bleak outlook.
In its quarterly earnings report last week, Samsung disclosed that demand from its "main customers" for custom chips has "continued to decline." Investors who spoke with The Wall Street Journal took that as a potential sign that Apple could begin shipping devices with chips built by Taiwan Semiconductor Manufacturing Co. as soon as this fall.
Sources reportedly indicated that TSMC began shipping A-series chips to Apple earlier this year, though the report didn't indicate whether that silicon is actually in the hands of customers. Every Apple "iDevice" teardown to date has revealed only chips built by Samsung.
Samsung's comments about "weak demand" going forward come as Apple is selling more iPhones than ever. Industry watchers expect sales to continue to grow this fall with the debut of an anticipated "iPhone 6," which is rumored to come in two new, larger screen sizes.
For the June quarter, Samsung saw its semiconductor business profits grow by 6 percent, though its overall earnings were a disappointment to investors. The company's lower-than-expected earnings represented its smallest profit in two years, and Samsung blamed increasing competition in the smartphone space for its results.
In addition to being fierce competitors in the smartphone, tablet and other markets, Apple and Samsung are also close partners who have collaborated on numerous custom chip designs. Their most recent creation is the 64-bit A7 processor that powers the iPhone 5s, iPad Air, and iPad mini with Retina display.
Given Apple's continued reliance for parts on the threat that is Samsung, industry watchers have expected for some time that Apple will transition its chipmaking partnerships away. Specifically, TSMC has been pegged as a potential replacement for Samsung, though to date its believed that Apple and TSMC have only worked on shipping Touch ID fingerprint sensors to users.
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59 Comments
Add to that their pending collapse in their primary expansion market of China and Samsung's days of "Samsung will kill Apple" are long gone.
It would seem to me the profitable chip making division should have been more important to Scammy than the unprofitable 'copy everything Apple does' division.
I'm confused. I thought I've been reading reports that pall did turning away from TSMC in favor of Samsung for the A8. This doesn't fit.
Totally agree w/ above comment. Essentially - Samsung arrogance (typical in that country) is the key to their demise. Samsung believed that they "could not be replaced" %u2026 that "they were in the power seat" %u2026 not Apple .. because "Samsung could copy - and then would undercut/underprice" Apple for EVERYTHING. Samsung was seriously in error. I proceed (and all smart professionals/business people) as we all can be replaced. Apple created an ecosystem. This ecosystem cannot be replaced by 1 gimic, period. Apple hires the very best Engineers (I know - they only take #1 candidates with experience on top of that - not just out of a great school). Sammy is being replaced - the key element is that they "cannot be trusted" .. nothing they can do to unwind this - they are viewed as dishonest, took years to set up their "firing" and they are now being fired %u2026%u2026%u2026%u2026they are toast %u2026 worse for them, their product stinks and even at the low end is being replaced by similar junk - good riddance, that is what they deserve
SAMSUNG made a gamble to put at risk it's biggest customer, Apple, to pursue smartphone competition with Apple and even after Google warned them to not copy so slavishly chose to do so. They were unable to repeat their success with Sony, Toshiba, and Panasonic and are now being treated to the same strategy by Chinese manufacturers. Their refusal to negotiate non-copy or clone with Apple, as in contrast with HTC, has resulted in a declining business relationship and earning from Apple and likelihood this will continue as Apple insulates itself against a competitor. The manufacturing prowess of SAMSUNG has apparently created an arrogance that the market is about to change. Their choice to put at risk their biggest customer, Apple, has become a reality. If Apple's investments in other display, chip, and materials (sapphire and liquid metal) companies pay off, then SAMSUNG will be on the outside looking in as the Chinese gobble up the low end of the market. Whether the Chinese will be a major threat to Apple is an open issue, but if Apple was able to survive the "Android" assaults over the last 7 years, then It can probably survive this assault, not so clear for SAMSUNG.