Apple Excludes Samsung from A7 Chip Manufacturing

Now With Less SamsungÖApple has given Samsung the boot on the next generation of AX processors, according to a report from The Korea Times. Citing Samsung suppliers, the newspaper reported that Apple has begun sharing proprietary information for a new generation chip with Taiwan Semiconductor Manufacturing Company (TSMC), excluding Samsung in the process.

The report specified the chip as the Apple A7 and said that it would ship in the first half of 2014. Note that Apple hasn't actually announced an A7 processor, though such nomenclature would be consistent with Apple's past processor naming conventions. In January, TSMC was rumored to have gotten the gig to make an A6X processor for Apple.

"Apple is sharing confidential data for its next A7 system-on-chip (SoC) with the Taiwan Semiconductor Manufacturing Company (TSMC). TSMC has begun ordering its contractors to supply equipment to produce Apple’s next processors using a finer 20-nanometer level processing technology," an unnamed executive at one of Samsung’s local partners in Korea told the newspaper.

Rumors have swirled for the last 12-18 months that Apple was looking for a new manufacturing partner for its AX line of processors, which are used in iPhones, iPads, and iPod touches. Samsung has been Apple's fab partner from the get-go, but Apple became tense with the Korean company after Samsung began copying Apple's industrial design and interface innovations in the smartphone and tablet markets.

The two companies have embarked in massive lawsuits and trade regulatory fights around the globe. In the most significant event in that battle, Apple won a $1.05 billion damage award from a U.S. jury in August, and Samsung was officially name a copycat. That case is still wending its way through the post-trial and appeals phases.

Despite the lawsuits, however, Apple and Samsung have remained business partners, with Samsung supplying many components to Apple. One of the most significant aspects of that relationship has been Apple's AX processors.

Apple designs its own processors, but contracts with Samsung to have them produced. It's a multibillion dollar business for Samsung—or it has been up to now—and Apple was a major customer for Samsung's semiconductor operations.

The processors are made in a major facility outside of Austin, TX, and the loss of Apple's business will not only effect Samsung, it will have a negative impact on the local Austin economy. The Korea Times said that Samsung was trying to expand its contract work with Nvidia to fill the gap that Apple will be leaving.

Computerworld's Jonny Evans noted that TSMC has been looking to expand operations into the U.S., but it remains unclear where the A7 processor would be manufactured.