Apple shift to TMSC for iPhone may force Samsung to split chip design, fabrication businesses

Samsung is reportedly looking at splitting off its chip fabrication business from the design aspects, to try and gain traction for the division after Apple abandoned it in the iPhone 7, and possible the future, in favor of TSMC.

According to a report from Business Korea, the four-segment Samsung LSI is being examined for a re-organization. The "system-on-a-chip" segment, and the design team will combine to form one entity, with the foundry business being spun-off into its own entity.

The evaluation allegedly came after Apple migrated all of its business for the A-series processor to TSMC.

Not immediately clear are the benefits to Samsung as a corporate entity for doing so, other than potential tax benefits. Samsung's chip foundry has recently signed a large contract with Qualcomm for future production, offsetting the losses from Apple's shift somewhat.

Overall, Samsung's chip manufacturing profits have suffered somewhat under the strain of Apple's departure for TSMC. Samsung's chief executive Kwon Oh-hyun warned the company of a low-growth 2016 partially as a result of the contract shift, as well as from a challenging smartphone marketplace.

Apple manufacturing partner TSMC has been rumored to be the sole provider of the A10 Fusion processor as found in the iPhone 7 family, as well as the future "A11" processor.

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13 Comments

lkrupp

said about 7 years ago

Oh oh, here we go.

JanNL

said about 7 years ago

lkrupp said:

Oh oh, here we go.

That's how it feels, isn't it?!

jbdragon

said about 7 years ago

If you're going to flat out copy everything Apple does year after year, Apple at some point will just give you the finger and not work with you anymore.

gprovida

said about 7 years ago

Given Apple's penchant to have multiple vendors on critical parts, this is surprising (e.g., screens and modems). One argument might be technical and cost, but the SAMSUNG response to create organizational "firewall" between foundry and design suggest the inherent conflict of interest between SAMSUNG mobile and foundry business. Apple may have been concerned or had evidence that reflects SAMSUNG's rep to steal Proprietary design data as well as tempation that the increasing performance gap between SAMSUNG and Apple CPU chips may also have played a part. This is entirely speculative conspiracy theory, but is interesting none the less.

wood1208

said about 7 years ago

Tell me why there was a rumor/news about Samsung Galaxy loosing 3.5mm jack, Home button and screen covering front of phone.Because Apple was working with Samsung's display division and besides confidentially agreement, sure they pass Apple's design direction to their phone division. In past, this exactly has happened with their chip division to pass Apple's non-copy confidential information within Samsung divisions. Even with split, Samsung internal corporate culture won't change because at the end, these employees will indirectly talk to other divisions to get information. It is better to work with TSMC who is not player in making phones or tablet..