Apple's Custom iPhone Chips Would Hurt Samsung

Yesterday the New York Times reported that an engineer’s LinkedIn profile appears to confirm that Apple will make its own application processors for the iPhone — something long suspected after Apple purchased low-power chip firm PA Semi and got a license to tweak the ARM mobile core. Such news might cheer Apple enthusiasts, but it’s grim for Samsung, the provider of the application processor in the iPhone and the No. 3 applications processor company, according to iSuppli.

Samsung has its own license to the ARM core — which is a specific chip architecture designed for low-power applications — but isn’t a large player when it comes to the brains running the latest generation of smartphones. Wireless chip firms such as Qualcomm and Texas Instruments (the No. 1 applications processor provider) build their mobile application processors on top of ARM cores as well.

Ironically, many of the more notable Samsung phones, including the Instinct, use a Qualcomm applications processor because the Samsung’s handset business tends to use integrated platforms that contain the brains and the communications capabilities of the phone on the same platform, rather than separated as the iPhone does. Samsung doesn’t release market data for its mobile applications processors, but analysts say an Apple loss would be significant as Samsung looks to grow its high-end mobile applications processor business. Even though it will take years to design and certify new chips for Apple’s products (likely until late 2009 or 2010 at the earliest), such a loss will sting Samsung.

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