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Apple to Reduce Samsung’s Dependency by Signing Deal With TSMC

June 29, 2013 - Written By Leonardo Benveniste

Apple and Samsung have a long, long history together, they’re two of the most important companies in the world of technology and the top two smartphone manufacturers.

They compete in the market with their smartphones, tablets and laptops but they also had supplier deals for many years. Apple has used Samsung components in their iPhones and iPads to the point that about 25% of the one of the iPhones was manufactured by Samsung. Apple was provided with memory chips, displays and processors. But for the last years, Apple and Samsung have been at each others throats in legal disputes over patents, mostly Apple accusing Samsung of copying its designs both in hardware and software for Samsung’s line of Galaxy devices with both wins and loses all over the world.

Apple has been trying for years to cut its dependency on Samsung for supplies, but the fact that no ones has Samsung’s quality and manufacturing capabilities has made it impossible for Apple to make the change. Apple tried to shift demand into other companies like Sharp for its LCDs but made the switch back to Samsung after some fail attempts.

Now, the Wall Street Journal reports that Apple has signed a deal with Taiwan Semiconductor (TSMC) to manufacture mobile processors. However, TSMC executives have already said that the company’s chips will not ship in Apple devices until the next year.That means that this years new version of the iPhone and iPad, excepted in the fall, will still be made by Samsung. As for the 2014 supplies, it is said that Samsung will remain Apple’s primary supplier, so if everything goes well will TSMC, the big change shouldn’t come before 2015.

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We’ve heard rumors about Apple ditching Samsung for TSMC for a few years now, and that the deal wasn’t made because TSMC had some manufacturing issues that caused their chips not to be at Apple’s level. We also know that Apple tried to get TSMC to set aside some factory space to be exclusive to Apple but TSMC chairman Morris Chang rejected that request.

TSMC will manufacture its chips using a 20nm process, while Samsung’s chips for the A5 and A6 chips, are made with the 32nm one. TSMC chips should be more power efficient than Samsung’s or even the company’s current 28nm ones.

Samsung’s profit from Apple’s components were around $10 billion last year according to some analysts in Hong Kong. If Samsung were to lose Apple as client, it will certainly be damaging to the company’s profits, so we’ll see what Samsung does to keep being the sole manufacturer of Apple’s chips. Maybe some new manufacturing process, or maybe TSMC won’t be able to deliver the same quality that Samsung has  been able to do throughout all this years.