Apple Dropping Samsung for A5 Chip Fabrication

Apple has apparently started turning away from Samsung for its custom chips in favor of Taiwan Semiconductor Manufacturing Company. According to unnamed sources, Apple is using TSMC to build the A5 chips used in the new iPad 2.

A5 chipTSMC may be making iPad processors

EE Times reports Apple is still using Samsung for its A4 chip production for the iPhone 4 and original iPad. Both the A4 and A5 were designed by Apple for its own products.

Distancing itself from Samsung’s chip fabrication service makes sense because Apple considers the company a competitor in the smartphone and tablet market. TSMC also has the ability to produce more chips for Apple than Samsung can manage with its facilities.

Assuming the report that Apple is working with TSMC are correct, it’s also possible that the deal is only to supplement Samsung’s production. Analysts have been ramping up their iPad 2 order estimates, and if they’re accurate, Apple could need more processors than Samsung can deliver.

Apple doesn’t comment on rumors, so there isn’t any official word on which company will be delivering A5 chips in the long term. Considering Apple sees Samsung as a competitor, however, it seems likely that its future chip orders will be limited to RAM.