Samsung and Apple finally divorcing after years of court battles

TSMC slips comforting arm round Apple, slips memory chip into pocket


Apple has signed a deal with a new chip manufacturer which could see its troubled relationship with Samsung finally brought to an end.

Cupertino has reportedly inked an agreement with the Taiwan Semiconductor Manufacturing Company (TSMC) which will eventually see it take over full production of mobile processors for all iOS gizmos.

Currently, Apple is stuck in an unhappy marriage with Samsung, which is still the fruity firm's main chip supplier. The pair have been at each other's throats since 2011, fighting an interminable series of patent infringement legal battles in courts around the world. The tit-for-tat lawsuits hinged upon squabbles over key parts of the firms' smartphone software and hardware.

Apple and TSMC have reportedly been in discussions since 2010, but haven't been able to sign on the dotted line because TSMC reportedly refused requests by Apple to invest in the firm, or to dedicate a facility to producing Apple components.

Cupertino-watchers claim that Apple has been trying to arrange a divorce from Samsung for some time. However, like all break-ups, nothing's happening straight away and it looks as if Samsung will be making Apple's chips for at least a year to come.

Credit Suisse analyst Randy Abrams claimed Apple would account for about 8 per cent of TSMC's total revenue. Cupertino would be an "important new leading-edge" customer, he said. This could rise to 15 percent in 2015, Abrams continued.

So what of the spurned partner Samsung? Well, aside from continuing a patent-infringement battle against its former ally, the South Korean firm will probably begin bashing out chips for other companies, while still giving Apple DRAM and NAND chips for its iOS devices – at least in the short term.

Its margins are thought to be lower on processor chips than on memory chips. This margin will be even tighter when Apple stops buying processors, meaning Samsung will be on the look out for new customers.

TSMC is the world's largest manufacturer of chips, if taken by revenue, and is based in Taiwan, which is prone to earthquakes and theoretically vulnerable to a physical Chinese attack, as Beijing still counts Taiwan as a rogue breakaway state. However, it already operates plants in Singapore and Shanghai, as well as Washington state.

The firm is also said to be building another plant in the US, which chimes with Apple's stated policy of trying to build complete products within American borders. ®


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