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Apple reportedly dropping Samsung and turning to TSMC for A7 chip development


A report from the Korea Times relays that Apple is excluding Samsung from its plans to develop its next-gen A7 processor.

While Apple and Samsung compete fiercely in the smartphone market, the two companies also happen to be very important business partners. Apple, of course, currently relies on Samsung to manufacture all of the chips used in its lineup of iOS devices. In turn, Apple's business contributes billions upon billions to Samsung's bottom line each and every year.

With Apple currently embroiled in legal disputes with Samsung across the globe, it should come as no surprise that Apple is actively seeking to move its chip business elsewhere.

"Apple is sharing confidential data for its next A7 system-on-chip (SoC) with the Taiwan Semiconductor Manufacturing Company (TSMC). TSMC has begun ordering its contractors to supply equipment to produce Apple's next processors using a finer 20-nanometer level processing technology," said an executive at one of Samsung's local partners in Korea by telephone, Wednesday.

While reports of Apple shifting away AX chip production from Samsung to TSMC have persisted for quite some time, the latest report appears to have more substance to it.

Taiwan's Economic Daily News also reported recently that Apple had yet to place any orders for A7 processors with Samsung. But of particular interest is that the publication also relayed that Samsung's exclusive contract to produce Apple's A-series of chips is slated to expire in June 2013.

In short, the door may now be wide open for TSMC to swoop in and take over Apple's chip-production business from Samsung.

It therefore stands to reason that Apple's 2014 lineup of iOS devices will likely be Apple's first products to include chips built by TSMC.

iDownloadblog adds:

Risk production will apparently start this summer and TSMC should be able to churn out the A7 chips in volume in early-2014, in time for a 2014 wave of iPhone, iPad and iPod upgrades. The Apple-designed processor is expected to be fabbed on TSMC's sophisticated 20-nanometer process technology.

So does this mean that Apple's relationship with Samsung will effectively come to an end come 2014?

Not necessarily.

iDownloadblog previously sourced a quote from Korea Investment & Securities researcher Seo Won-seok who anticipates that Samsung will retain approximately 70 percent of Apple's chip business in 2014. Going forward, however, you can bet that Apple will attempt to shift as much of its chip business away from Samsung as possible.

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