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

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.