Sigh of Relief Samsung: Signs a Deal with Apple for Chip Manufacturing

2014 has not been a successful year for the leading Android smartphone maker in the world, Samsung. After the company released its financial reports which detailed that it had suffered a 60 percent profit drop for the 3rd quarter of 2014, the first impression that consumers got struck with was the impending downfall of Samsung. However, the South Korean company is not out of the major league smartphone category yet as the Korea Times has reported the company’s biggest smartphone rival, Apple, has decided to partner with Samsung. The partnership is expected to commence in 2015.

The core details of the coalition suggests that Apple will require Samsung to start mass producing the Cupertino tech company’s chips, which will be incorporated in to future iPhones and iPads. The multi-billion dollar deal will see Taiwanese chipmaker TSMC’s position fall to second place, while Samsung will become Apple’s primary supplier once more. According to reports, by the end of 2016, Samsung is expected to produce and supply Apple with processing chips that will account for nearly 80 percent of Apple’s mobile products.

Production will start next year, with Samsung focusing on its local chip making factories to start the mass production. However, the company is also looking to expand its throughput by expanding its facilities in New York and Austin. As for what the company will be producing; Samsung will be producing application processors (APs). Application processors are logic chips and will allow Samsung to increase its profit margins, something that could not achieved if it continued to focus on producing conventional DRAM and NAND memory chips.

One reason why Apple has decided to choose Samsung as its primary supplier because when compared to TSMC’s chips, the South Korean firm’s processors are more efficient in terms of energy consumption.

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