In spite of its ongoing litigation with Apple, Samsung is allegedly ramping up production of the Apple-designed quad-core A6 chips in its manufacturing plant in Austin, Texas, which opened in 2007. The claim is attributed to industry sources privy to the both companies’ plans, who told Korea Times Monday:
Apple has been in talks with Samsung over shipment of its A6 quad-core mobile processor (AP) chips to be used in the next iPhone. It appears that Apple clearly has concluded that Samsung remains a critical business partner. […] Samsung Electronics will apply its advanced 28-nanometer processing technology to produce qualified A6 mobile APs. TSMC will provide customized chips with designs from Apple, however, the volume will be very small.
This comes on the heels of the latest news that Samsung was “counter-attacking Apple again” and seeking to stop iPhone 4S sales in Australia and Japan following Apple scoring a ban on the sale of Samsung’s Galaxy Tab 10.1 in Australia last week. Apple’s entire business with Samsung which also inolves NAND chips, SSDs and more is said to be worth an estimated $8 billion in parts this year alone, roughly five percent of Samsung’s entire revenue. This makes Apple Samsung’s biggest overseas client.
TSMC hasn’t yet stabilized the manufacturing process and “Apple isn’t taking risks”, the source noted. EETimes first reported back in March that Apple had shifted production of the then unreleased A5 chip for iPad 2 from Samsung to Taiwan Semiconductor Manufacturing Company (TSMC), which failed to materialize at the time. The report asserted the two companies had entered into a foundry relationship (here and here). Reuters followed up in July, writing TSMC began a test production run of A6 chips on its newest 28-nanometer process and 3D stacking technologies, corroborated by the Taiwan Economic Times.
Switching your silicon provider is anything but easy. The process often takes years to complete, meaning it makes sense for Apple to continue sourcing in-house designed processors for iOS devices from Samsung – until TSMC is ready to take over. At the same time, Samsung is sending a clear message that it will not be entering a broad cross-licensing agreement with Apple. Recent legal setbacks will not discourage the Korean consumer electronics maker in its pursuit to fight Apple in courts all over the world. Per another Korea Times article quoting a high-ranking Samsung executive which asked not to be identified, Samsung “don’t see any signs of entering a comprehensive cross-licensing deal with Apple”:
We don’t think we were losing our grip. The recent decisions by courts in Europe weren’t favorable. But we are still positive that we will win eventually. The bottom line is that our legal team has reached a consensus to beat Apple at the appeals courts. We are in for the long-haul.
Interesting enough, this Samsung person also gave the publication a name of a high-ranked Samsung executive to blame should Samsung’s legal spat with Apple take a turn for the worse:
Samsung chief executive Choi Gee-sung will take full responsibility of the ongoing legal issue.
The two companies may, however, could already be at work behind the scenes on a possible resolution because a Samsung spokesman told the paper that Samsung’s chief operating officer Lee Jae-yong (son of Samsung Electronics Chairman Lee Kun-hee and heir apparent to the group’s leadership) was planning on meeting Apple CEO Tim Cook after being invited to a private memorial service held for Apple co-founder Steve Jobs yesterday at Stanford University. Another source called for iPad 3 and iPhone 5 with a slightly bigger four-inch screen sporting the same 960-by-640 pixel resolution Retina Display from LG Display and the “redesigned surface”, with both devices allegedly launching “within the first quarter of next year”. Given the recent iPhone 4S launch, Apple releasing another iPhone model in just a few months would be an unusual move, if not unnecessary. Susquehanna Financial Group analyst Jeffrey Fidacaro also mentions iPad 3 in his recent note to clients. He wrote that Apple commissioned Asian contract manufacturers with building up to one million iPad 3 units in the fourth quarter of this year. Mind you, not that analysts’ quotes matter (they often are wrong in their crystal ball peering) or that Fidacaro has an established record of Apple predictions. As a case study, one needs to look no further than the last week’s note by Ticonderoga Securities analyst Brian White who boldly predicted a lower-priced tablet from Apple he dubbed iPad mini, allegedly due “in the first few months of 2012”.