Samsung’s Austin plant gets overhaul: prep for new iPhone, iPad chips?

Apple Event 10/4 - Phil Schiller introduces the A5 chip in the iPhone 4S

Samsung is planning a $3 billion to $4 billion overhaul of part of its chip-making plant in Austin, Texas. The company, one of the world’s largest chip manufacturers, is going to retrofit the factory for a potentially more profitable product. It’s going from memory chips to systems chips such as application processors.

Samsung is already known to manufacture mobile chips for Apple at part of this same factory. Is Samsung preparing to devote more space and resources to new chips that will power future Apple devices? Or is it building out capacity to continue making A5 processors?

The local paper, the Austin American Statesman, reported late Monday:

The South Korean company, which is the world’s second-largest chipmaker, last month closed the part of the Austin factory devoted to memory chip production.

Over the next six months, the company will replace older memory equipment with new manufacturing gear that is better suited to making advanced system chips for smartphones and other mobile devices.

When that work is completed and the retrofitted part of the factory is in production in the second half of 2013, then the entire production of the factory is expected to be devoted to making “system chips” for smartphones and other smart mobile devices.

Apple is Samsung’s biggest customer when it comes to mobile chips for iPhones and iPads, and is also the largest chip buyer in the world — it is expected to buy almost one out of every 10 chips sold this year.

Samsung makes Apple’s A5 custom-designed chips at its Austin plant, which are used in the iPad 2, iPhone 4S and new iPad. The question is, will the part of the factory that’s getting a makeover be preparing to build even more A5 chips, or is it readying production for the next generation of Apple’s mobile chips? It does sound like the latter, if the factory isn’t going to come online until late next year when Apple will likely be putting together yet another new model of iOS device.

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