Samsung Will Dedicate Half of Processor Production to Apple

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Samsung is said to be ready to quadruple the production of its mobile processor chips and devote half of all its output to Apple, according to the The Korean Times.

Despite the smartphone and tablet competition, Apple and Samsung seem to be entering a new era of cooperation after the two companies had a minor falling out in 2008.

“Samsung has agreed with Apple to quadruple monthly shipments of its mobile AP chips to 20,000 sheets throughout this year from 5,000 last year,” said an industry source, citing Samsung’s suppliers as the source, on Wednesday.

Samsung was also reported to be building a US$3.6 billion computer chip plant in Austin, Texas. Apple has a major financial and support center in Austin.

That’s also a major blow to local medium-sized tablet PC makers as Apple is more profitable and lucrative for Samsung,” said [an] anonymous executive.

Apple also buys Flash memory and SSDs from Samsung. It seems that these two companies have realized that the combined power of their cooperation is a rising tide that will float both their boats past the competition.

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Comments

ilikeimac

This could be one of the other strategic deals that Tim Cook mentioned recently when he boasted about Apple’s long-term investment in flash memory several years ago.

jfbiii

Quadruple! That a LOT of ruples. I wonder what number of devices that projects out to?

Tiger

Yeah, but Microsoft’s not worried….WTF?

xmattingly

I wonder if it would be cost-effective for Apple to just buy Samsung’s chip manufacturing division outright.

Terrin

No, for the same reason sold off it’s Mac manufacturing. It doesn’t want to be responsible for the overhead and the inventory.

I wonder if it would be cost-effective for Apple to just buy Samsung?s chip manufacturing division outright.

greatgazoo192

xmattingly:
Although Apple is flush with cash, Samsung’s semiconductor operations would be difficult for Apple to purchase due to several reasons:
1) Samsung is the #2 semiconductor manufacturer in the world (only behind Intel, see: http://en.wikipedia.org/wiki/Semiconductor_sales_leaders_by_year#Ranking_for_year_2010 or http://news.cnet.com/8301-13924_3-10112545-64.html ) and has set it’s sights on being #1.  Although Apple represents a significant amount of Samsung’s processor output, processor production is only a small percentage of Samsung’s total integrated circuit capacity.  Samsung is the #1 manufacturer of both DRAM & Flash memory in the world.
2) Last year Samsung posted in excess of $28B in integrated circuit sales.  Assuming Samsung would even be interested in selling the IC business to Apple, it would cost Apple many hundreds of billions of dollars to buy it.  Even Apple isn’t that cash rich.
3) Samsung is a HUGE conglomerate, manufacturing TV’s, food, appliances, large tanker/cargo ships, semiconductors, etc.  Samsung’s semiconductor division is one of their “crown jewels” and a key segment of their overall future plans.  In other words, Samsung would never sell it.

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