“Over the past week, investors, analysts, journalists and the like have all been focusing on Samsung’s less-than-stellar performance from its smartphone business in the second quarter,” Min-Jeong Lee reports The Wall Street Journal. “But the outlook is also looking murky for its other, lesser-known business – making the microprocessors that are widely used in Apple’s iPhones and tablets. Samsung up until last year had a monopoly on Apple’s supply but earlier this year, Taiwan Semiconductor Manufacturing began shipping them to Apple, according to people familiar with the matter.”
“Samsung’s microprocessor business is largely divided into two parts—making its own microprocessors called the Exynos series and supply chips to others by competing with the likes of TSMC and Globalfoundries,” Lee reports. “Samsung executives admitted on a recent conference call that the outlook isn’t so bright for this business. ‘Sales and profitability from System LSI (logic chip business) worsened as demand from main customers continued to decline,’ Robert Yi, Samsung’s head of investor relations said last week. His comments confirmed, albeit indirectly, how Apple’s gradual shift away from Samsung as a customer of microprocessors was eating into its profits.'”
MacDailyNews Take: DYK? “Exynos” is Korean for “inferior silicon.”
“As TSMC ramps up production, analysts say such a move will continue to hurt the company’s logic chip business this year and early next year,” Lee reports. “Demand for its Exynos chips also remain weak. Even for Galaxy smartphones, the Exynos chips aren’t a very popular choice, analysts say. Looking into the third quarter, Yi acknowledged the difficulties the company was seeing in this area, saying that the ‘System LSI business is expected to remain weak due to continued low demand from customers.’ He didn’t elaborate on the company’s customer base.”
Read more in the full article here.
MacDailyNews Take: Kick ’em in the chops, Tim!
Of course, we’ve been saying Apple should dump Samsung across-the-board for years and years, now. It makes no logical sense to send billions of dollars in business to a company that’s been ripping you off for over half a decade. It’s good to finally see some pain being doled out by Apple.
[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]