Apple’s A6 manufacturing will remain a Samsung job

Tue, Oct 18, 2011


Despite Apple and Samsung’s massive legal dispute which now spans 4 continents and over 10 countries, Apple’s upcoming A6 chip – which will probably debut with the iPad 3 – will likely come from Samsung.

Over the past few months, a number of reports have claimed that Apple was moving its processor production away from Samsung and shifting it over to Taiwan Semiconductor Manufacturing Company (TSMC) in order to lessen its reliance on a company that Apple, in court documents, has referred to as the “copyist.”

But now the Korea Times is reporting that Apple and Samsung’s business relationship may be too intertwined at this point to make a jump to TSMC a practical option.

“Apple has been in talks with Samsung over shipment of its A6 quad-core mobile processor (AP) chips to be used in the next iPhone. It appears that Apple clearly has concluded that Samsung remains a critical business partner,” an executive from an Apple parts supplier based in Korea said on condition of anonymity.

He said that Samsung has been increasing the output of the Apple-designed A6 chips in its manufacturing plant in Austin, Texas.

One of the initial Apple/TSMC rumors alleged that Apple was working with TSMC to move to a 28nm process. And while Apple may still do that, the volume there will be relatively low. Further, the A6 manufactured by Samsung will also be the result of Samsung’s 28nm processing technology.

Now Apple has been on the receiving end of an increasing number of favorable legal judgments against Samsung. And while one might assume that their legal tussles might affect their business relationship, there’s apparently too much money to be had by both companies to risk fracturing the relationship just yet.

The report notes that Samsung CEO Choi Gee-sung recently explained that the legal issues between Samsung and Apple are being handled independently of its business relationship with Apple – which, you should know, is Samsung’s top customer as it contributes upwards of $8 billion a year to the company’s bottom line.

Samsung said its capability to manufacture customized chips on a foundry or contract basis gives it an advantage that TSMC and other rivals cannot currently match.

“The manufacturing process at TSMC hasn’t been stabilized. Considering Apple’s previous patterns of adopting qualified technologies, Apple isn’t taking risks. Samsung offers better pricing and capacity commitment for the A6 mobile APs,’’ said an official from a different Apple supplier.

Regarding Samsung and Apple’s current legal strife, note that Tim Cook this past April noted during Apple’s earnings conference call that they expect their strong relationship with Samsung to continue and that while Apple respects Samsung as a whole, they felt that Samsung’s mobile division had crossed the line and ultimately forced Apple to handle matters in the courts.

Just last week we reported that Apple had been in talks with Samsung for months regarding their alleged infringement before initiating a lawsuit in April, 2010. Further, Steve Jobs even personally tried to persuade Samsung to stop blatantly ripping off Apple’s iOS design 8 months before the original lawsuit was filed.

g, Steve Jobs himself stepped into the fray back in July of 2010 hoping to convince Samsung to top ripping off design elements from Apple’s iPhone and iPad. Doing the quick math, this was a full 8 months before Apple finally initiated its legal suit against Samsung.



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