Embroiled in an international patent dispute, Apple, Inc. (AAPL) is looking to drop the “friend” bit from its “frienemy” relationship with Samsung Electronics Comp., Ltd. (KSC:005930). The world’s top two smartphone makers, the American and South Korean electronics firms have seen an increasingly belligerent relationship in the smartphone industry; and yet they still are bound by a close tie. Apple pays Samsung to manufacture the semiconductor chip “brains” of its mobile devices.
But Apple is working hard to dump Samsung. Reports came on Wednesday that Apple was shifting contracts for its fourth generation iPad’s A6X system-on-a-chip (SoC) to Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330). The news was first reported in the Commercial Times. The report was later picked up by the AFP and other international outlets.
In 2012 Apple and Samsung are estimated to have done $12B USD in business together. However, as Apple shifts contracts to other chipmakers like TSMC that number is expected to dwindle. 2013 should still see large payments from Apple to Samsung. The TSMC production of iPad SoCs won’t even hit the trial phase until sometime this quarter, and likely won’t reach volume until the middle of the year if all goes well. And there’s no guarantee all will go well; Apple previously looked to shift away from Samsung only to see those efforts reportedly stymied by poor results from TSMC.
Samsung should also be able to soften the blow of any lost business from Apple with its increasing relationship with Qualcomm Inc. (QCOM), maker of the Snapdragon SoC line which sees frequent use in Android and Windows smart phones/tablets. While Apple is fleeing Samsung due to external factors, Qualcomm appears to be moving away from TSMC directly due to its yield performance. Of late Samsung has begun to produce Snapdragon S4 chips for Qualcomm, a contract which TSMC was originally expected to exclusively supply.
Some reports have indicated that Samsung may look to punish Apple for its $1.05B USD patent infringement victory against it by raising prices on i-device SoCs. However, other reports dispute these claims.
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