Apple to buy chips from TSMC as it attempts to extricate itself from dependency on Samsung

“In the past year, Apple executives have expressed concern that their dependence on Samsung limits Apple’s ability to control its destiny by constricting Apple’s negotiating power and ability to use different technologies, according to people who have been told so by Apple executives,” Jessica E. Lessin, Lorraine Luk and Juro Osawa report for The Wall Street Journal. “Apple has cut back on some purchases. It no longer buys iPhone screens from Samsung and has reduced iPad-screen purchases, suppliers say. And Apple has been buying more flash-memory chips—an essential component for storing data—from other makers, say former Apple executives and officials at another chip supplier.”

“But Apple remains critically dependent on Samsung. The microprocessor brains that control iPods, iPhones and iPads are Samsung-built. And some new iPads still use Samsung screens, according to examinations of the devices by industry analysts,” Lessin, Luk and Osawa report. “Apple’s deal this month to start buying chips from TSMC is a milestone. Apple long wanted to build its own processors, and it bought a chip company in 2008 to begin designing the chips itself. But it continued to rely on Samsung to make them. As early as 2010, Apple and TSMC started discussing working together to build the chips, say the TSMC executives. In 2011, TSMC senior executive Chiang Shang-yi met Apple officials to discuss collaborating on the complex process.”

“Samsung has reason to keep the Apple relationship alive. Apple is still Samsung’s biggest customer for components, and a complete retreat by Apple from Samsung would hurt Samsung’s earnings, analysts say,” Lessin, Luk and Osawa report. “Apple’s component orders from Samsung were set to hit around $10 billion last year, says Mark Newman, an analyst at Sanford Bernstein in Hong Kong. That represents a significant chunk of the 67.89 trillion won ($59.13 billion) Samsung posted in sales from its component business, which includes chips and displays. The Apple processor, where Samsung is currently the sole supplier, accounted for $5 billion of purchases in 2012, he estimates. ‘If Samsung loses Apple as a client, it will have an impact because Apple represents a large portion’ of Samsung’s sales of non-memory chips, he says.”

Read more in the full article here.

MacDailyNews Take: Maybe the slavish copier can make up the lost billions in vacuum cleaner sales?

Smirk.

Related articles:
TSMC wins three-year deal to supply Apple with A8, A9, and A9X chips, say sources – June 24, 2013
‘Breakthrough Apple product’ looming? Imagination Technologies and TSMC strengthen technology collaboration – March 25, 2013
TSMC CEO comments signal massive next-gen Apple A-series chip orders – January 19, 2013

34 Comments

  1. People should know that chip operation only represent an extreme small portion of the whole Samsung Empire… Even Apple cease to order anything from Samsung, it will not hurt Samsung that much… unfortunately.

    1. What does “the Samsung Empire” have to,do with anything? You should know that facilities that produce chips are not the same ones that produce vacuum cleaners. If Samsung can’t keep its chip factories supplied with orders then . . . Well? Samsung can’t keep its chip factories supplied with orders. If Samsung has to shut down computer facilities the stock market will react.

    2. If I read the article correctly apple component orders from Samsung was $10 billion. Not sure how much from chips, but what would be biggest part of that? Samsung losing $10 billion is nearly 13 percent of their income. That is huge….

    3. “it will not hurt Samsung that much ”

      You are wrong. The point of getting into the handset business was to EXPAND Samsung’s business and profits. Losing $10 Billion per year, at the same time that Apple just raised the performance bar and Samsung is being attacked (successfully) by Chinese makers, will cost Samsung more than they profited last year on total handset sales.

      What ironic, is that Samsung has positioned itself to abandon Android, while Chinese makers are using something else entirely. The really big loser is Google.

  2. I’m in the market for a new washer and dryer, and was seriously considering Samsung, until their copying of Apple’s iPhone turned me off. Now LG is my current choice. When my Samsung TVs die down the road I’ll replace them with another manufacture’s products.

    1. LG make complete rubbish. LG is the old Goldstar (which made very mediocre stuff), rebranded and with masses of marketing dollars thrown at it. LG is a triumph of marketing over manufacturing substance. But I’m with you on Samsung, I’ll never buy a Samsung product, ever. Pay for quality – Miele, Bosch, Asko, etc.

      1. I agree. I have an LG washer and dryer, and an LG fridge. The washer and dryer have been OK (not great but minimal issues) but the fridge has blown a fuse (which luckily I figured out and fixed myself or that would have cost a bunch), doesn’t make ice for shit and leaks water down the back of the ice holder, freezer door pops open when you close the fridge door and sometimes doesn’t close back all the way. Construction is very flimsy with several plastic pieces breaking very easily. I won’t by another LG anything.

  3. The other benefit Samsung gets from providing parts to Apple is an advanced look at upcoming products as well as Apple’s expected sales volumes. Valuable information for a competitor.

    1. “‘WAS’ an advanced look at upcoming products”…

      Hope all the money they sunk into their “Store Within a Store” displays in BestBuys drains them dry slowly as well…

  4. HTC was also recently complaining about Samsung. I see no one rushing to use any Samsung products if they could possibly help it. It’s not just Apple, every phone manufacturer will try and distance themselves from Samsung.
    Samsung is going to be facing a backlash like it wouldn’t believe. They may have the marketing muscle at the moment, but it will not last long. They screwed the pooch.

  5. 1. d4 Nf6
    2. c4 e6

    3. Nf3 b6

    4. g3 Bb7

    5. Bg2 Be7
    6. Nc3 O-O

    7. O-O d5

    8. Ne5 c6
    9. cxd5?! cxd5

    10. Bf4 a6
    11. Rc1 b5
    12. Qb3 Nc6
    13. Nxc6 Bxc6

    14. h3? Qd7

    15. Kh2 Nh5
    16. Bd2 f5!
    17. Qd1 b4!

    18. Nb1 Bb5
    19. Rg1 Bd6
    20. e4 fxe4! (say goodnight, Samsung.)
    21. Qxh5 Rxf2
    22. Qg5 Raf8

    23. Kh1 R8f5

    24. Qe3 Bd3
    25. Rce1 h6!!


    ain’t it the truth?

      1. just an analogy for my own amusement: the notation from The Immortal Game, my point being that white (Samsung) is driving its offense against the more strategic black (Apple) who holds the position at 20. e4 fxe4! … there is no substitute for creativity.

    1. Samsung people like most asian do not play chess , they play the go game and they use the same type of strategies in the business world . Nothing we can do except learning it and improve strategies in the way apple does .

  6. I’m am very surprised and somewhat angry that it has taken Apple long to essentially get nowhere. This relationship should have been terminated long ago. Apple should use some of its cash to help suppliers build factories and buy equipment with extremely good loan terms or something like that or just help them outright to buy the equipment and than own it but letting them use it. But I am happy this relationship is coming to an end all so slowly.

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