Samsung may take over iPhone A-series chip manufacturing next year

By

Samsung
Apple and Samsung are BFFs again.
Photo: Jim Merithew/Cult of Mac

Samsung will reportedly resume production of Apple’s A-series chips for the iPhone from next year, having lost out on orders to TSMC in recent years.

If true, the move is a major win for Samsung, which has increasingly been Apple’s go-to manufacturer as of late, to the betterment of both companies.

The move is reportedly the result of Samsung’s investment in extreme UV lithography machines, some of the the most advanced chip manufacturing equipment around, to produce seven-nanometer mobile processors solely for iPhone.

Kwon Oh-hyun, one of Samsung’s three co-CEOs who oversees chip and other parts businesses, is said to have won over Apple executives during a recent visit to Cupertino, which took place last month.

Relying on Samsung

Samsung currently produces all of Apple’s OLED displays for the upcoming iPhone 8. With Apple reportedly upping its focus on OLED displays for next year’s handsets (which will likely all sport OLED screens), Samsung is currently increasing its investment in OLED manufacturing.

Apple also reportedly turned to Samsung to resolve some of the yield issues it is having with its NAND flash storage chips for the upcoming iPhone. Allegedly,  the overall supply of NAND flash chips bound for Cupertino was falling short of demand, due to problems experienced by existing suppliers SK Hynix and Toshiba. Samsung, comparatively, had stable yield rates for its 3D NAND technology, and was additionally willing to scale up its output of 3D NAND chips.

This collaboration is doing well for Samsung. The company recently reported that its Q2 operating profit rose 72 percent from this time last year, setting a new record for the South Korean tech giant in the process. Samsung’s partnership with Apple was singled out as one big reason for this.

Whether other suppliers will be happy about this newly-strengthened partnership remains to be seen. It doesn’t take much fortune telling to work out that TSMC is unlikely to be too happy about losing out on orders to Samsung, but other companies have also chimed in on the topic in the past.

For instance, Foxconn’s CEO Terry Gou once got involved to lobby on behalf of TSMC, prompted by his fears that Samsung was taking over more and more of the available manufacturing work from Apple. It looks like he may have right to be concerned!

Source: The Investor.kr