Apple Reducing Samsung's Role in Chips Supply

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It appears that the left hand at Apple Inc. (NASDAQ: AAPL) is finally figuring out what the right hand is doing. For the past year or so, Apple has taken every opportunity it could to drag Samsung Electronics into court somewhere in the world charging the Korean company with infringing Apple's intellectual property rights. At the same time, the Cupertino company depended on its partnership with Samsung's semiconductor manufacturing division to produce the chips for its iPhone and iPad devices.

No more, according to the Korean Times. Apple reportedly did not use Samsung to help develop the A6 processor for the iPhone 5, instead using Samsung strictly as a foundry to manufacture the chips. A Samsung executive said:

Samsung's agreement with Apple is limited to manufacturing the A6 processors. Apple did all the design and we are just producing the chips on a foundry basis.

One of Samsung's to chip designers went to work for Apple last week, indicating that Apple likely plans to minimize even further its relationship with Samsung's foundry.

Apple recently signed a deal with Taiwanese chipmaker TSMC to produce the next generation of A-series chips. Samsung is likely to continue to manufacture flash memory for Apple, but that business, too, could begin to dry up as Apple broadens its supply chain.

Neither Apple nor Samsung had any official comment on the report.

Apple's shares are essentially flat at $629.99 shortly after noon today, in a 52-week range of $363.32 to $705.07.

Paul Ausick

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