Apple Can't Quit Samsung Yet

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Apple  has countless reasons to shift its chip manufacturing business away from Samsung. The South Korean conglomerate has used its supplier relationship with the Mac maker to compete more aggressively. To that end, it seems inevitable that Apple will transition to another foundry partner, although that's much easier said than done, since Apple and Samsung have collaborated deeply on chip production for many years.

Reports of a possible partnership with Taiwan Semiconductor  have persisted for years on end but has gained legs in recent months, following reports from reputable news outlets. That could potentially be a big win for Taiwan Semiconductor, as Apple's foundry business was estimated at $5 billion last year.

However, Apple may have to make this transition gradually, and Samsung may still be onboard to produce 30% to 40% of the next-generation A8 chips, while Taiwan Semiconductor could get the contract for the remaining 60% to 70%. The A8 chips would likely be due out with the iPhone 6 next year.

In today's episode of Tech Teardown, Erin Kennedy discusses Apple's gradual shift away from Samsung with Evan Niu, CFA.

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Erin Kennedy and Evan Niu, CFA, both own shares of Apple. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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