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Samsung’s Chip Operations Just Took a Big Loss

August 5, 2014 - Written By Jamil Bryant

We all know the rivalry between Apple and Samsung. Apple has accused Samsung of stealing their ideas; Samsung turns around and bashes them in a bunch of ads. The Apple vs. Samsung war is pretty ugly and it just gets worse as the years pass by. In a report by the Wall Street Journal, Apple is turning their backs on Samsung completely which will cost them a few billion won.

While a lot of us don’t know this, Samsung does more than make smartphones, tablets, and household appliances, the company also creates the chips that power other companies handsets and computers. Apple is one of Samsung’s biggest customers when it comes to getting chips made. All of those A7 and A8 chips that power Apple’s iPhones and iPads were created by Samsung. The process of how the chips are created starts in cupertino. Apple designs the chips using architecture provided by ARM, which is a British Chip company. Apple then sends those designs over to Samsung for them to manufacture the chip. Reportedly, Apple has jumped ship and has headed over to Taiwan-based TSMC for all of their chip manufacturing needs. The move of course is a result of their ever going war.

Since Apple has switched manufacturing companies, Samsung’s chip operation is expected to lose 877 billion won this year — Stateside that’s about $851 million. Samsung will be down 203 billion won — $197 million, in operating profit they made last year. Samsung’s Head of Investor Relations told the Wall Street Journal, “Sales and profitability from System LSI (logic chip business) worsened as demand from main customers continued to decline.” The Wall Street Journal added, “His comments confirmed, albeit indirectly, how Apple’s gradual shift away from Samsung as a customer of microprocessors was eating into its profits.” According to Analyst, Apples switch to TSMC will continue to hurt Samsung’s Chip making business for the rest of this year and on into early next year. Samsung’s home grown Exynos chips aren’t a popular choice say analyst. With so much money flying out of the door, what are your thoughts about Samsung’s loss? Will one of the largest electronic companies in the world make a comeback? Let us know in the comments.