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Summary:

Apple may rely less on Samsung as an iOS hardware partner, as TSMC is reportedly testing new chips it’s building for future Apple mobile products. This could be due to the current lawsuit between Apple and Samsung, but even if not, it simply makes sense.

apple-a5-feature

Apple may rely less on Samsung as an iOS hardware partner, as TSMC is reportedly testing new chips it’s building for future Apple mobile products. Reuters notes that Samsung is currently the only chipmaker producing Apple’s A5 chip for the iPad 2; that dual-core chip, or a similar version of it, is widely expected to appear in Apple’s upcoming iPhone. While Apple has previously locked up component deals with multiple manufacturers to help manage supply, the timing of another chip-maker testing its silicon coincides with patent disputes and a corresponding lawsuit between Samsung and Apple.

If Apple does change chip suppliers, it may not be an easy nor a fast process. According to an analyst at NH Investment and Securities, Seo Won-seok, Samsung has deep roots in the chip design and using another supplier could mean more research and development from Apple:

“It won’t be easy for Apple to dramatically change its chip provider from Samsung. It has to redesign the chipset, which Samsung has been deeply involved from the beginning and has some intellectual property. Apple could try various suppliers but they (Samsung and Apple) need each other and the relationship will continue.”

This scenario could be Apple’s standard component diversification strategy; companies often don’t want to rely on a single supplier for any one part, let alone the primary CPU of a mobile device. Up to now, Samsung has appeared to have enough capability to produce Apple’s A5 chip as needed, but if that silicon is meant to power a new generation of iPhones, and possibly iPod touch devices — meaning tens of millions of devices — Samsung could be hard-pressed to keep up with demand. Samsung builds chips for its own handsets and has already had to use Nvidia’s Tegra 2 for the Samsung Galaxy Tab 10.1 tablet as well as some of the Galaxy S II smartphones. For both Samsung and Apple’s sake then, it’s possible that another chip-maker could be testing production to limit the potential for component shortages.

Samsung and Apple have been dealing with the patent disagreements for more than year, however, and are now involved in the courts over similarities between Samsung’s Galaxy line of handsets and Apple’s iPhone. Apple was hoping to fast-track the case, but at least one part of it, the briefing process, won’t be accelerated, said a judge this week. Although there are good business reasons for Apple to seek out another CPU fabricator, these two hardware partners can’t be getting along as well as they once did.

Obviously we won’t know if TSMC has won any Apple CPU contracts until new devices arrive and are torn apart, but even without the current lawsuit situation, it simply makes sense for Apple to seek alternative component suppliers as consumers snap up iOS devices in growing numbers.

  1. This is childish and reminds me of little boys on a grade school playground. Apple should allow business go on as normal with Samsung and let the courts to settle the patent disputes in due time.

    Apple’s real supply chain weakness doesn’t lie in doing business with democratic Japan. It lies in its reliance on a repressive China for the bulk of its assembly process.

    1. Ah, Samsung is a *Korean* country, but yes, one with ostensibly, a freely elected government.

  2. @Mike: What does Japan have to do with Samsung?

    1. @PhillyG

      Mike has no idea, except he sounds like he is one of those “America First” movement people that think Apple will profit even more by manufacturing phones in the U.S.A.

      You know what’s childish, Mike? Making business decisions based on things that defy logic and based on illogical anti-business sentiments, like solely relying on a direct competitor to manufacture all your chips (Samsung) instead of diversifying your suppliers (TSMC). Apple is not the one displaying the childish behavior here, FYI.

  3. It would be a very bad decision on the part of apple, doing this might scuttle the chances of them winning the court battle. Very childish if they do this.

  4. keylogger for mac Monday, July 18, 2011

    “It won’t be easy for Apple to dramatically change its chip provider from Samsung”
    I do think so. At least it has a long way to go for changing its chips. They must consider a lot of factors before that.

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