Will Samsung Make Apple’s Next-Gen Chip?

Iphone 5

Will rival smartphone maker Samsung (SSNLF.PK) produce Apple’s (NASDAQ:AAPL) next generation of chips? Despite rumors that Apple is attempting to reduce its reliance on Samsung for components, a recent report from Korea Economic Daily via Apple Insider claims that Samsung has been contracted to produce 30 percent to 40 percent of an upcoming system-on-chip tentatively called the “A8.”

According to Korea Economic Daily, the so-called A8 chip will be used in some of Apple’s as-yet-unreleased devices, including the iPhone 6. The report also notes that Apple was forced to award more orders to Samsung after Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) was unable to produce enough chips on its own due to the complex 20 nanometer fabrication process.

Although some commentators speculated that Apple’s new A7 chip may have been exclusively manufactured by Taiwan Semiconductor Manufacturing Co., a recent teardown done by Chipworks’s researchers revealed that Apple’s latest A-series processor was still being manufactured by Samsung. Samsung also manufactures many of Apple’s A6 chips at its fab in Austin, Texas.

The Korea Economic Daily report contradicts earlier rumors that Taiwan Semiconductor Manufacturing Co. would soon become Apple’s exclusive chip provider. These rumors were bolstered by a report from Piper Jaffray analyst Jagadish Iyer via Apple Insider that noted that Taiwan Semiconductor Manufacturing Co. appeared to be recruiting workers in the Fishkill, New York, area in preparation for a local fabrication plant that would exclusively supply Apple.

Apple has reportedly been trying to reduce its dependence on Samsung for components ever since the South Korea-based company became one of Apple’s biggest rivals in the smartphone market. However, it appears that Apple’s long-running supplier relationship with Samsung will continue in the foreseeable future.

Follow Nathanael on Twitter @ArnoldEtan_WSCS

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