As Apple cuts out patent infringer Samsung, Korean copier plans to reduce U.S. chip production

“Samsung Electronics plans to reduce processor chip production and investment in its plant in Austin, Texas, this year due to sluggish demand from Apple and rising inventory, according to company and industry officials Tuesday,” Kim Yoo-chul reports for The Korea Times. “The officials said Samsung will cut its investment in the plant to 1 trillion won for this year as it has failed to win any major orders.”

“Apple is cutting its reliance on Samsung-manufactured processors, a key part in handsets and computers,” Kim reports. “‘Samsung will invest less than 1 trillion won [US$930 million] in its chip facility in Austin depending on the market situation,’ said an official at one of Samsung’s technology affiliates by telephone, asking not to be identified. ‘The utilization of the Austin line isn’t that high as Apple orders are disappointing. Samsung should have greater flexibility in operating its chip lines in Austin,’ he stressed.”

“‘This year, Apple will start using products from Taiwan’s TSMC (Taiwan Semiconductor Manufacturing), so the Korean company needs to find alternative customers,’ said an industry official. He said that Samsung has invested a total of $13 billion in the Austin plant since 1996, the firm’s biggest foreign investment so far,” Kim reports. “A leading brokerage house said that Samsung’s processor chip business will have another difficult time this year. ‘As Samsung diverts its resource away from the 20-nanometer (nm) level chip technology to accelerate 14nm and 16nm, the chance of it winning a significant portion of Apple’s business in 20nm is slim. Furthermore, the optimistic outlook from TSMC also suggests strong demand from Apple,’ Bernstein Research said in a note to clients.”

Read more in the full article here.

MacDailyNews Take: As we’ve been advocating for years. Hit ’em where it hurts. This is obviously much more efficient and impactful than multiple interminable lawsuits have thus far proven to be.

So, if this report is true: Better late than never, Apple.

And, Austin will be just fine without a bunch of convicted serial patent infringers running around lying, cheating, and stealing.


  1. Finally, an “Apple cutting Samsung out of the process” rumor that may actually have some merit …

    Just remember, MDN: this isn’t something Apple could do overnight. But I’m glad it appears to finally be happening. The sooner Apple can afford to move its business away from Samsung, the better.

    1. Rumors are that TSMC will acquire IBM’s NY chip fab. Unknown whether that facility is suited to making A series chips for Apple, but TSMC would still be supporting US jobs at a facility currently running under capacity if this goes through.

  2. Glad Apple seem to be doing this in a way that works for them and doesn’t sacrifice quality/value for money. Just cutting Samsung off wouldn’t have stopped them copying as they would be even more reliant on selling their phones so perhaps have even more reason to try and emulate Apple.

  3. Maybe this was all part of Apple’s masterplan! Get Samdung to blow $13 billion on a new chip facility in Austin, and then give their business to TSMC. I like how they think!

  4. HA…sluggish demand my ass.

    Translate : We are no longer making A series chips for APPL, our biggest customer which outsells one premium phone that stomps are best flagships. So how can we spin this? Oh right, sluggish demand means no more orders in the short term from APPL.

  5. Samsung have always copied whatever the leading manufacturer of the day has done and they will no doubt continue to do so. Samsung had ( and abused ) a special relationship with Apple as they were supplying key items for many Apple products. Apple and every other company have now seen that Samsung is a totally untrustworthy company.

    Now that Apple has dumped Samsung wherever possible as suppliers of major components for Apple’s new products, Samsung will no longer have any inside knowledge of what’s in the pipeline, when a new product is on the way, what sort of numbers Apple is expecting to sell, or what technology those products will feature.

    Samsung took advantage of having inside information about Apple, but these days, they will only be able to start copying Apple products once they have been announced. Furthermore, Samsung can watch their rivals gearing up for increased production while their own factories are trying to make up for the loss of orders from the world’s biggest purchaser of semiconductors.

    It’s bad enough that Samsung are not getting enough orders, but it must be very galling seeing new companies flourishing from supplying products to Apple and knowing that those new companies are only being nurtured by Apple because Samsung acted so unbelievably stupidly. There is no doubt that those orders would have gone to Samsung by default if they had not acted so stupidly.

  6. “As Samsung diverts its resource away from the 20-nanometer (nm) level chip technology to accelerate 14nm and 16nm, the chance of it winning a significant portion of Apple’s business in 20nm is slim.”

    Thus REAL reason Samsung’s Austin plant is loosing business. They’re just trying to give Apple a black eye for Samsung’s lack of investment.

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