We've been hearing for a few years now that Apple has wanted to decrease its dependence on Samsung's manufacturing arm. The Cupertino-based company finally acted on those plans a year ago when it signed a chip deal with Taiwan Semiconductor Manufacturing Company (TSMC) and now, the shipments are flowing.
According to people familiar with the matter as reported by The Wall Street Journal, shipments of chips for smartphones and tablets started during the second quarter. What's more, the two companies have reportedly agreed to work together on advanced chip designs next year.
When the deal was signed a year ago, some had doubts as to whether or not TSMC could deliver the intricate chip designs that Apple requires. It would now seem that those doubters have been silenced.
Analysts estimate Apple orders will now account for around 10 percent of TSMC's annual revenue this year. The company brought in just under $20 billion in revenue in 2013.
As with any business, it's rarely a good idea to have all of your eggs in one proverbial basket. By diversifying its supply chain, Apple is reducing risk (what if Samsung were suddenly unable to fill orders due to a plant strike, fire or natural disaster?).
Diversification will also allow Apple to negotiate better pricing for future chip deals with suppliers. Less money spent on component production means more can be put into other areas, returned to investors, etc.