Samsung has been having some issues lately, reporting falling profits in the most recent quarter. Although most of this is due to shrinking growth in phone sales, where Apple continues to dominate in terms of profit share, Apple has also affected Samsung’s income from its microprocessor production business. With TSMC having exclusivity over Apple’s A8 production, to be used in the upcoming iPhone 6, Samsung’s outlook for ‘logic chips’ is also gloomy, as The Wall Street Journal highlights in a new report.
Samsung executives admitted on a recent conference call that the outlook isn’t so bright for this business.
“Sales and profitability from System LSI (logic chip business) worsened as demand from main customers continued to decline,” Robert Yi, Samsung’s head of investor relations said last week. His comments confirmed, albeit indirectly, how Apple’s gradual shift away from Samsung as a customer of microprocessors was eating into its profits.
It has been widely reported that Apple and Samsung’s relationship in the courtroom has caused Apple to look for ways to distance itself from its rival. Until this cycle of iOS devices, however, all of Apple’s SoC’s (the A4 through A7) have been manufactured at Samsung foundries, for yield and technological reasons. The A8, though, will be manufactured by TSMC.
Sales of Samsung’s own line of mobile processor chips, the Exynos line, have also been weak. There is some potentially good news on the horizon, however. A new report posted by the Economic Daily News claims that Samsung has snagged production of Apple’s next-generation iOS processor, ostensibly named the ‘A9’. The validity of the rumor is very questionable at this early stage of course, as it is not clear why Apple would go back to Samsung so quickly. However, this rumor does corroborate with a DigiTimes study from July, which said Apple is looking to use 14 nanometer processes for the A9 SoC, something which Samsung foundries are already set up to do.
Last month, TSMC began shipping its A8 chips as part of the iPhone 6 production ramp. According to The Wall Street Journal, the chips are produced using a 20 nanometer process.