Apple Works with Samsung to Bring on GlobalFoundries as A-Series Chipmaker

| Analysis

The Apple Crystal BallWe have a complex story coming out of New York that says GlobalFoundries is going to be making at least some of Apple's A-series chips in the company's "Fab 8" facility in Malta, NY. What's interesting is that according to the story, which was reported by The Times Union (via MacRumors), Samsung will be helping GlobalFoundries set it up.

Samsung is currently Apple's chip-fabricating partner. The company makes Apple-designed chips used in iOS devices at a massive facility outside of Austin, TX, and it is a major source of revenue for the South Korean company.

Of course, Apple and Samsung have also become bitter rivals engaged in dozens of patent battles throughout the globe, and it has long been rumored that Apple is looking to either replace Samsung as its chip maker or diversify production with other makers.

To that end, there have been many rumors about Apple firing Samsung, Apple hiring Taiwan Semiconductor Manufacturing Company (TSMC), Apple adding TSMC, and even prior reports of Apple hiring GlobalFoundries.

Throughout all of those reports, however, Samsung has continued making Apple's chips, and for good reason. Apple is designing the best mobile processors on the market (the A7 used in the iPhone 5s and iPad Air is a big step forward in this area), but Samsung has some of best foundry capabilities on the planet, at least in terms of the ARM-based technology used in mobile.

So what are we to make of this new story involving Samsung helping GlobalFoundries get up and running with Apple chips? From the Times Union article:

A small team from Samsung is going to come to Fab 8 with Apple’s chip-making “recipies.” [sic] Samsung will help GlobalFoundries set up the manufacturing processes at Fab 8 that will be needed to make the chips.

The story added:

It’s unclear if GlobalFoundries will be making the chips with Samsung as the customer on behalf of Apple, or if Apple will be the direct customer, with Samsung helping set up the operation to mirror what it does in Austin. Either way, Apple will be the ultimate customer. And there is no indication that Samsung’s Apple production will cease in Austin.

Which adds some intrigue to the story, at least if you're interested in the ongoing relationship between Samsung and Apple, as I am.

There are so many factors involved. For instance, Apple's demand could be exceeding Samsung's capacity. Both companies continue to grow, and Samsung makes chips for Apple and its own products. In this light, Samsung could be making some side money helping Apple find additional capacity, or Samsung could be outsourcing on its own (not likely, because it's Apple we're talking about).

Pragmatically speaking, Samsung could have decided that taking a few tens of millions of dollars (my guess) in consulting fees to help Apple find a new supplier would be far better than not getting that money and having Apple kick it to the curb anyway.

Or, Samsung could be contractually obligated to ensure a smooth migration to a new supplier come.

The permutations are inexhaustible.

Comments

Lee Dronick

I assume that Samsung is not one entity, but some independent divisions. If so the chip side could be very much different from the consumer side. Does anyone know if that is the case?

Lee Dronick

I just did a quick search Samsung is a conglomerate that includes shipbuilding, life insurance, financial services, advertising agency, entertainment, hospitality, as well as electronics.

ksec

” but Samsung has some of best foundry capabilities on the planet.”

No they dont. That belongs to Intel.

“at least in terms of the ARM-based technology used in mobile.”

No they dont. That belongs to TSMC.

I think the basics are Samsung dont have the capacity for Apple. Apple’s demand are very spiky. These has some negative effect with Samsung since they could not rely their Flagship phone against iPhone as they could not have enough supply of their own Exynos SoC. I suppose Samsung too wanted to rely less on Apple but they could not afford to lost Apple as a customer. ( If that happen it would be disastrous for Samsung Electronics ) Therefore relying on GF, which together with Samsung are both IBM Foundry Alliance partners. Makes things much easier ( relatively compared to TSMC ) to port to.

iJack

”but Samsung has some of best foundry capabilities on the planet.”
No they dont. That belongs to Intel.

Byran didn’t say the best, he said some of best, and I feel comfortable saying that you don’t know that’s not true.

wab95

Lee:

You are correct, Samsung are (is) a conglomerate, comprised of multiple businesses, of which their mobile business is but one, and their chip manufacturing foundry is another.

Bryan:

There are idealists and there are pragmatists. Amongst successful and creative entrepreneurs and their businesses, these attributes coexist in a balance and harmony that is as unique as are the leaders of these businesses. The idealism guides both the core values of a company, in turn giving rise to that company’s culture, as well as product development; whereas pragmatism, tempers both, and when properly harnessed, enables leaders to see beyond the moment, embrace opportunities and form essential alliances. This defines good governance and leadership, and is the hallmark of an adult.

All that is simply to say that the adults at both Apple and Samsung have stepped forward on the question of GlobalFoundaries.

Log-in to comment