Will Apple Have to Get Back With Samsung?

Apple wants to move away from Samsung. This we know. While the South Korean conglomerate has many independent divisions, Apple doesn't like giving the component segment business while the smartphone segment is its most viable competitor. To that end, the surest signs yet have emerged that Apple has inked a three-year deal with Taiwan Semiconductor .

The Mac maker is reportedly on board for 20-nanometer, 16-nanometer, and 10-nanometer production at TSMC over the next few years, compared to the current 32-nanometer process used at Samsung right now. Well, The Korea Economic Daily doesn't necessarily think that's the case, and now says that Samsung has scored a contract to supply Apple with 14-nanometer A9 chips in 2015. Those processors would power the future "iPhone 7."

The report does corroborate the news that Apple is going with TSMC for 20-nanometer production of A8 processors, but says Apple will be switching back to Samsung for the following generation. Samsung has a technological lead with its 14-nanometer process, giving Apple little choice but to get back with its biggest rival.


Separately, Piper Jaffray analyst Gene Munster believes that TSMC has been having problems with its 20-nanometer process. Intel has numerous manufacturing advantages, but it may not have the infrastructure or intellectual property necessary for the specific types of chips that Apple needs. Short of investing in its own foundry (which has been long-rumored as well), Apple might be stuck with Samsung for the foreseeable future.

Collaborating with Samsung's semiconductor division entails sharing details about product forecasts and roadmaps, the last thing Apple wants going to its biggest competitor. Even if Samsung has an adequate information firewall between its semiconductor business and smartphone operations (which is debatable), there's no question that enriching the component side inevitably helps fund development for Samsung's Galaxy lineup.

Breaking up is hard to do.

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The article Will Apple Have to Get Back With Samsung? originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Ed Kim

Get "back" in bed with Samsung? Apple never left. Listen, TMSC isn't going to bail out Apple and make all their latest generation chips. TMSC doesn't want that much of their revenue tied to just one customer. Like any good business they want a diverse customer base.

July 17 2013 at 12:35 AM Report abuse rate up rate down Reply