Apple shifts away from Samsung, rumored to tap TSMC for A6 production in 2012

Mon, Jun 27, 2011


The ongoing legal dispute between Samsung and Apple is as real as it gets. Apple is by all accounts looking to obtain a preliminary injunction that would prevent Samsung from releasing a slew of products Apple claims infringe on its line of iOS products. Samsung, naturally, has vowed to vigorously defend itself against Apple’s accusations and has even taken to countersuing Apple for allegedly infringing on 10 of Samsung’s patents.

Now the tricky thing is that Apple is one of Samsung’s biggest customers and in 2010 alone contributed approximately $6 billion worth of business to Samsung’s bottom line. Now, Samsung is a huge company and it’s corporate divisions are said to be as disparate as can be. In other words, while Apple has beef wtih Samsung Mobile in particular, that shouldn’t, in theory, affect Apple’s relationship with other factions within the company. Indeed, Tim Cook explained as much during Apple’s most recent earnings conference call.

We are Samsung’s largest customer (for liquid crystal display panels and semiconductors) and Samsung is a very valued component supplier to us.

And I expect the strong relationship will continue. Separately from this, we felt the mobile communication division of Samsung had crossed the line and after trying for some time to work out the issue, we decided we needed to rely on the courts.

Now that’s all great for PR, but there’s no denying that Samsung is simply rubbing Apple the wrong way with their claims that they’ll be releasing their alleged “copycat” products this Summer on schedule.

Can Apple really separate its iOS beef with Samsung from its role as a valued Apple supplier?

Perhaps not.

Ars Technica writes today, citing a “plugged in source”, that manufacturing on Apple’s next-gen A6 chip will be sourced out to Taiwan Semicoundtor Manufacturing Company (TSMC) as opposed to Samsung.

While Apple continues to source components from Samsung for its mobile devices under contracts that were likely signed more than a year ago, Apple presented a huge pile of evidence that Samsung was attempting to copy at least some of the secret sauce that made its iPhone and iPad so successful. So Apple very likely sees moving production to a non-competitor as a strategic business move.

Dan Heyler, a semiconductor analyst with Merrill Lynch in Taipei, told the China-based Commercial Times newspaper on Friday that TSMC will most likely be producing “A6” processors for Apple, a next-generation ARM-based design, in 2012.

This jives with a previous report this past March from the EETimes which relayed the same shift in strategy. That report explained that Apple’s potential move away from Samsung was not only a result of Apple and Samsung’s fractured strategy, but perhaps also because TSMC has the highest yileding 40-nm process in the foundry world along with the most 40-nm capacity. ArsTechnica, though, colors that report with some new information – namely that “Apple has reportedly been working with TSMC to move to a 28nm process. That may offer Apple a slight competitive advantage, at least until its competitors migrate to the same process.”

It might be too soon to say, but Samsung may very well have bitten off more than it could chew.


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