Apple Drops Samsung for Custom ARM Chip Production

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Apple seems to be distancing itself even more from Samsung if reports that it is moving its A-series ARM chip production to Unimicron Technology Corp. Apparently Unimicron has already started small scale chip production for Apple, and will ramp up to full scale production in 2013 after completing construction on a new factory.

No Apple chips for you, Samsung!The relationship between Apple and Samsung has been strained for some time thanks to ongoing court battles around the world over accusations that they are using each other's mobile device patents without proper licensing. Apple's biggest win in their patent infringement fight came a few months ago when a U.S. Federal Court Jury ruled Samsung willfully infringed on Apple's patents and awarded the Cupertino-based company over US$1 billion in damages.

Samsung successfully convinced Judge Lucy Koh, who has been overseeing the case, to deny an injunction blocking the sale of many of its Android-based products in the U.S. and dramatically decreasing the value of Apple's court room win in the process. Apple is appealing that ruling in hopes of breathing life back into its injunction request.

Samsung confirmed this fall that its involvement in Apple chip production had been scaled back and that it was no longer involved in the design process. One company executive stated, "Samsung's agreement with Apple is limited to manufacturing the A6 processors. Apple did all the design and we are just producing the chips on a foundry basis."

Reports surfaced in November claiming Apple had already begun moving its chip production away from Samsung in favor of Taiwan Semiconductor Manufacturing Company, raising concerns with analysts that the company won't be able to keep up with Apple's chip production demands.

Regardless of where Apple's custom chip production lands it seems clear that the company is doing what it can to cut its ties with Samsung, and assuming it can find partners that can meet its production needs, will ultimately have a negative impact on Samsung's bottom line.

[Thanks to Bright Wire for the heads up.]

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John Dingler, artist

The more rapidly Apple can cut out Samsung without damaging Apple’s production schedule and quality, the better for Apple enthusiasts such as I am.

I wonder what kinds of safeguards Apple put in place to reduce the chances of Unimicron Technology Corp. getting in retail hardware business to compete with Apple. After’s Samsung’s example of betraying Apple, FoxCon should be watched as it has also gotten into retail hardware.


The problem with that, John Dingler, is that Samsung didn’t just build Apple components, it did a great deal of R&D for Apple products in general (hence why Jobs was so furious that they “stole” the very R&D that Apple had hired them to do and made their own product out of it).

One Samsung executive described it like this (paraphrased): “our chip or memory division creates a great new product, and then sells it to Apple. Then our Mobile division slams its head into a wall because we just sold our best technology to our biggest competitor.”

Samsung’s bottom line will be hurt by this in the short term, and Apple won’t have to worry about funneling money to a competitor. But at the same time they won’t be benefiting from Samsung’s huge R&D budget anymore, which could lead to a significant divergence between Samsung’s homegrown phones and Apple’s.

Should be interesting, anyway.

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