Samsung official says Apple no longer plans to use their technology

By on October 15, 2012, 6:00 PM

Apple has been trying to reduce their dependence on Samsung for well over a year as the two continue to battle it out in multiple courts across the globe. That’s never been clearer than it is now as a senior Samsung official told the Korea Times that Apple has made it clear they no longer plan to use their technology moving forward.

Referring to Apple’s new A6 processor used in the iPhone 5, an anonymous Samsung source said Cupertino designed the chip entirely in-house (something we already knew) and that their only responsibility was to produce it on a foundry basis. It’s a marked change as Samsung was involved in chip design and development on past Apple projects.

So with Samsung seemingly out of the picture for future production, who will Apple use to manufacture their processors moving forward? If speculation from analysts and chip sources from late last week are accurate, Taiwan Semiconductor Manufacturing Company (TSMC) will be responsible for producing Apple’s next generation SoCs. TSMC is the world's largest contract chip manufacturer.

Gus Richard from Piper Jaffray claims Apple is working with TSMC to produce future chips using the company’s 20 nanometer manufacturing process. CNET contacted a chip industry source who corroborated Richard’s claim, saying the relationship between Apple and Samsung has deteriorated so much that the two are now just filling contractual obligations before Apple makes a change.

Whether or not the deal pans out will reportedly depend upon TSMC’s ability to take on Apple’s full manufacturing needs. As one could imagine, such an undertaking would command an enormous amount of time and resources.




User Comments: 23

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Guest said:

As the saying goes, you don't bite the hand that feeds you.

and that goes both ways, ironically.

samsung is losing a market.

apple is relying on a market which caters to the chip needs of other companies.

(shortage in the making? artificial shortage in the making? funny that apple supply is always in the shortage despite moving millions of stocks)

Camikazi said:

Good luck to Apple but with the other fabs denying them exclusive use to meet their needs combined with no other company being able to put out the numbers that Samsung can I see them having shortages on chips cause of this.

howzz1854 said:

Good luck to Apple but with the other fabs denying them exclusive use to meet their needs combined with no other company being able to put out the numbers that Samsung can I see them having shortages on chips cause of this.

you do know that TSMC is the largest chip producer in the world right? if anyone can produce that many chips it's TSMC.

Guest said:

Are you sure ? I thought Samsung was the largest and TSMC was second - the article says largest contract chip maker.

What will be interesting is what happens after this - will Samsung have over-capacity and drop prices ?

Guest said:

Samsung fully developed 20nm tech production. TSCM? Does it have the tech? I did not hear that. Under developing? Apple's faith is great!

Adhmuz Adhmuz, TechSpot Paladin, said:

Samsung fully developed 20nm tech production. TSCM? Does it have the tech? I did not hear that. Under developing? Apple's faith is great!

TSMC already has Fab 15 putting out 20nm chips, they can expand to suit Apples needs if the contract were to go there way. TSMC is also the world's largest dedicated independent semiconductor foundry, Samsung ranks 4th, but probably not after they lose Apple.

howzz1854 said:

Are you sure ? I thought Samsung was the largest and TSMC was second - the article says largest contract chip maker.

What will be interesting is what happens after this - will Samsung have over-capacity and drop prices ?

YES! I am sure

TSMC's market cap is 7 times larger than Samsung's its' not even a comparison. TSMC has been the largest semiconductor maker since the late 90's and it hasn't changed. 2nd is closely followed by UMC. for a comparison, TSMC's total revenue in 2011 in regard to semiconductor manufaturing was over 14 billion, samsung's semiconductor revenue was only less than 2.

http://en.wikipedia.org/wiki/Foundry_model

it's like comparing a gorilla to a puppy dog.

I personally like majority of Samsung's product, and I am all for competition against the big monopolies, which is why I think Samsung played this one completely wrong.

howzz1854 said:

Samsung fully developed 20nm tech production. TSCM? Does it have the tech? I did not hear that. Under developing? Apple's faith is great!

please do some research. TSMC is one of the oldest, and has been in semiconductor business way before samsung.

ShadowDeath said:

Good luck to Apple but with the other fabs denying them exclusive use to meet their needs combined with no other company being able to put out the numbers that Samsung can I see them having shortages on chips cause of this.

you do know that TSMC is the largest chip producer in the world right? if anyone can produce that many chips it's TSMC.

True but after Apple suing their supplier who else would want to chance supporting them?

Ranger1st Ranger1st said:

I'm glad to see Samsung done with Apple. Apple diminished the Samsung brand in a huge way.

Guest said:

Apple should do this since a long long time ago

Guest said:

Funny to hear that Samsung is the biggest chip maker while we always found words "Made in Taiwan" on almost all chip we can found..

Staff
Per Hansson Per Hansson, TS Server Guru, said:

Are you sure ? I thought Samsung was the largest and TSMC was second - the article says largest contract chip maker.

What will be interesting is what happens after this - will Samsung have over-capacity and drop prices ?

YES! I am sure

TSMC's market cap is 7 times larger than Samsung's its' not even a comparison. TSMC has been the largest semiconductor maker since the late 90's and it hasn't changed. 2nd is closely followed by UMC. for a comparison, TSMC's total revenue in 2011 in regard to semiconductor manufaturing was over 14 billion, samsung's semiconductor revenue was only less than 2.

http://en.wikipedia.org/wiki/Foundry_model

it's like comparing a gorilla to a puppy dog.

I personally like majority of Samsung's product, and I am all for competition against the big monopolies, which is why I think Samsung played this one completely wrong.

I don't understand how to read these numbers.

It excludes in-house products.

So while Samsung does not reach so high compared to TSMC they are still tiny compared to Intel who only makes chips for themselves.

[link]

Guest said:

This is the point: TSMC sell all their chips as chips. Samsung sell most of their chips as their own TVs, cameras, phones, DVD players, etc, etc.... what they sell as chips is a fraction of their chip production.

pencil_ethics said:

Are you sure ? I thought Samsung was the largest and TSMC was second - the article says largest contract chip maker.

What will be interesting is what happens after this - will Samsung have over-capacity and drop prices ?

YES! I am sure

TSMC's market cap is 7 times larger than Samsung's its' not even a comparison. TSMC has been the largest semiconductor maker since the late 90's and it hasn't changed. 2nd is closely followed by UMC. for a comparison, TSMC's total revenue in 2011 in regard to semiconductor manufaturing was over 14 billion, samsung's semiconductor revenue was only less than 2.

http://en.wikipedia.org/wiki/Foundry_model

it's like comparing a gorilla to a puppy dog.

I personally like majority of Samsung's product, and I am all for competition against the big monopolies, which is why I think Samsung played this one completely wrong.

Samsung fully developed 20nm tech production. TSCM? Does it have the tech? I did not hear that. Under developing? Apple's faith is great!

please do some research. TSMC is one of the oldest, and has been in semiconductor business way before samsung.

I'm not sure where you get your facts from, TSMC's current market cap is US$79.27bn versus Samsung Electronics' US$177bn (at prevailing exchange rates); TSMC was founded in 1987, Samsung started making semiconductors in 1974. Why is Samsung only 4th on the sales list? Because its biggest customer is itself.

MilwaukeeMike said:

"Why is Samsung only 4th on the sales list? Because its biggest customer is itself"

I read an article in Forbes that Apple was trying to do this same thing. They keep almost all of their revenue from Asia in Asia. Partially to avoid paying taxes if they brought it back home, but also because the industry things Apple is going to build their own plant over there.

1 person liked this | howzz1854 said:

Are you sure ? I thought Samsung was the largest and TSMC was second - the article says largest contract chip maker.

What will be interesting is what happens after this - will Samsung have over-capacity and drop prices ?

YES! I am sure

TSMC's market cap is 7 times larger than Samsung's its' not even a comparison. TSMC has been the largest semiconductor maker since the late 90's and it hasn't changed. 2nd is closely followed by UMC. for a comparison, TSMC's total revenue in 2011 in regard to semiconductor manufaturing was over 14 billion, samsung's semiconductor revenue was only less than 2.

http://en.wikipedia.org/wiki/Foundry_model

it's like comparing a gorilla to a puppy dog.

I personally like majority of Samsung's product, and I am all for competition against the big monopolies, which is why I think Samsung played this one completely wrong.

Samsung fully developed 20nm tech production. TSCM? Does it have the tech? I did not hear that. Under developing? Apple's faith is great!

please do some research. TSMC is one of the oldest, and has been in semiconductor business way before samsung.

I'm not sure where you get your facts from, TSMC's current market cap is US$79.27bn versus Samsung Electronics' US$177bn (at prevailing exchange rates); TSMC was founded in 1987, Samsung started making semiconductors in 1974. Why is Samsung only 4th on the sales list? Because its biggest customer is itself.

you guys are confusing actual foundry production manufacturing with company overall sales. Samsung and intel as companies are the largest players in the tech industry for chip sales, with Intel capturing the majority of the market share, Samsung being second. TSMC is NOT in the picture because it doesn't sell chips. but when it comes to actual foundry production, TSMC has the majority of the market share with UMC second, samsung at 4th. the difference is TSMC, UMC don't sell their chips directly to consumers, they're suppliers who produce and sell to their clients like Samsung, AMD, Nvidia or what not, you name it. so on paper, when you talk about who has the biggest market share in regard to the brand of chips, yes Intel and Samsung are the top two, but when you talk about who has the biggest production fab market share in foundry, that's TSMC and UMC. BIG difference.

howzz1854 said:

Samsung didn't start investing in its Foundry business until 2006, even though it has already been making memory IC's since 1974. TSMC has been in the foundry business since 1978, because unlike Samsung that its core business.

apple to apple:

Foundry market share: http://en.wikipedia.org/wiki/Foundry_model

overal chip revenue: [link]

BIG difference

Guest said:

Great, now how is Apple suppose to steal Samsung's ideas!

Kashim Kashim said:

Good luck to Apple but with the other fabs denying them exclusive use to meet their needs combined with no other company being able to put out the numbers that Samsung can I see them having shortages on chips cause of this.

you do know that TSMC is the largest chip producer in the world right? if anyone can produce that many chips it's TSMC.

TSMC may be the largest chip foundry in the world, but that doesn't mean they're the best. They do have lots of customers worldwide and at times can suffer severely from production volume constraints. Many companies have been burned by TSMC's manufacturing "kinks" and low yields in the past. I think AMD and nVidia can both attest to that.

Also, since Apple has been working with Samsung for years, they were probably getting a better price per chip than they will get from TSMC. In this scenario TSMC has the upper hand. I mean, if Apple can't get enough chips from TSMC, where are they gonna go? Intel? Maybe Apple should just build their own chip foundry. They certainly have the cash for it.

howzz1854 said:

My argument was simply to correct the misconception of foundry capacity and foundry market share, in no where I stated anything about TSMC's quality let along likability. if you really read my post fully you would've picked up that I said I'd rather Samsung give TSMC a run for its money, that I am all for sticking it to the monopoly.

now as far as consumer goes, I think consumer might be the only winner here. if you look at Apple's past business strategy, it has always been dictatorship when it comes to bullying its suppliers. it's not hard to see why relationship got so bad, although we might never know why. but having to deal with the biggest foundry manufacturing supplier in the world, it might finally send Apple a message that they can't own the world.

sometimes you just gotta say no.

hahahanoobs hahahanoobs said:

Are you sure ? I thought Samsung was the largest and TSMC was second - the article says largest contract chip maker.

What will be interesting is what happens after this - will Samsung have over-capacity and drop prices ?

Samsung is a lot more picky about who they let in, because they have their own products to produce. TSMC will take almost anyone's money.

hahahanoobs hahahanoobs said:

...I said I'd rather Samsung give TSMC a run for its money, that I am all for sticking it to the monopoly.

Samsung is not that kind of foundry.

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