Report: Samsung to Deliver Half its 2011 Processor Production to Apple

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In a unique alliance, Samsung (maker of the iPad rival Android-powered Galaxy phone and tablet) will sell half of its mobile processor chip output to Apple (maker of the iPhone and iPad), according to a Friday report. Samsung makes the low-power but brawny A4 chip which Apple designed and uses in its iPhone, iPad, iPod touch and Apple TV.

“Samsung has agreed with Apple to quadruple monthly shipments of its mobile AP chips to 20,000 sheets throughout this year from 5,000 last year,” reports the Korea Times, citing an industry source.


This isn’t the first dealings the two rivals have had over the years. To ensure a steady stream of components for its iBook and PowerBook laptops, Apple in 1999 invested $100 million to help Samsung boost production of flat-panel displays. Apple has in the past also paid suppliers to keep flash memory available for its products.

Samsung announced Friday it expects “intensified price competition” for products, as well as lower prices for components in 2011. The chipmaker also said it will build a $3.6 billion chip processing plant based in Austin, Texas. According to the Korean publication, the plant will be used “mainly to produce non-memory chips.” The comments again point to the A4 or perhaps SSDs.

What’s interesting about that news is it closely matches the $3.9 billion Apple recently revealed it is providing an unnamed company for an uninterrupted supply of what Chief Operating Officer Tim Cook termed a “strategic” component.

Although some analysts have suggested the unnamed component is a high-resolution display for a future iPad 3, the deal could also involve an improved A4 for the iPhone. Apple sells two iPhones per second, reports say.

Comments by Cook could very well indicate Apple is again helping its rival build a new chip plant. “These payments consist of prepayments and capital for process equipment and tooling,” he recently said.

[ComputerWorld, Korean Times]

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