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Apple finally signs deal with TSMC to move away from Samsung - WSJ

TSMC will make some of the chips going into Apple’s products starting with 2014. But Samsung will still provide Apple with processors in 2014, as well as displays and memory modules.
June 29, 2013

The thorny relationship between Apple and Samsung is well known. From close partners, the two companies became fierce rivals following Samsung’s entry in the smartphone business, but years of lawsuits and obvious hostility haven’t stopped the two top players in the mobile industry from maintaining an uneasy cooperation.

Samsung currently manufactures the systems on a chip that act as the brains of the iPhones and iPads, as well as a part of the displays and memory modules for Apple’s mobile devices. But that will change soon.

WSJ reported yesterday that Apple has finally took the big step of signing with TSMC a deal that will see the Taiwanese chip foundry build Apple’s processors starting with 2014.

Meanwhile, the bulk of the chips in the iPhone and iPad will still be made by Samsung, though from 2015, TSMC will take over most, if not the entire production.

This long rumored deal was plagued by glitches in TSMC’s technology, says WSJ. Apparently, the first discussions between Apple and the Taiwanese company started in 2010, but until now, TSCM hasn’t been able to deliver the quality and quantity demanded by the Cupertino-based company.

What does this mean for Samsung? Mainly, it’s a financial loss. According to an analyst working for Sanford Bernstein, Samsung made about $5 billion from Apple’s chip business in 2012. It’s a significant amount of money for sure, but Samsung’s entire component business brought in about $59 billion in the same period, so the Koreans can certainly take the hit.