ZDNet (via 9to5mac):
> Kim Ki-nam, president of the Korean electronic giant’s semiconductor business and head of System LSI business, told reporters at Samsung’s headquarters in Seoul that once the company begins to supply Apple with chips using its latest technology, profits “will improve positively”.
Samsung produces about 30% of Apple’s A8 chips (the majority are made by Taiwan’s TSMC).
> Sources told ZDNet Korea that Samsung already has a contract in place with Apple to produce the A8’s successor, tentatively named the A9, which will be made using the 14-nanometre process.
Samsung says their 14nm FinFET process will be ramping up by the end of the year. The A8 is a 20nm chip, so 14nm is a big leap in miniaturization. Samsung’s 28nm process was used to produce the A7, and the A6 was produced using a 32nm process.
Samsung’s chip business was clearly hurt by Apple’s shift toward TSMC. Why shift back to Samsung?
> Meanwhile, TSMC, the world’s largest contract chip maker, is expected to produce its next-generation chip using a 16-nanometre process.
14 < 16. Size matters.
There is also the strategic value of keeping your friends close and your enemies closer. Every chip Samsung Semiconductor produces for Apple is one they’re not producing for Samsung Electronics. Apple can keep them begging by alternating suppliers for different generations, but if they ever cut off SS entirely, they’d keep their factories running by producing for SE.
Dave, Apple’s strategy is not to stop doing business with Samsung. That would be stupid, because Samsung often has the best technology on market at a given time point.
The problem is one of dependency. Apple sells several generations of products at any time, forming their version of a product portfolio. They want to distribute that portfolio between Samsung and non-Samsung providers, and it’s not always practical to negotiate and organize the logistics of the same chip being made by two completely different companies, the way Apple typically sources Flash memory and displays from two or more companies.
The SoC are way more sophisticated and specialized and require a lot tighter work with the company that’ll manufacture them.
So to distribute risk and dependency, Apple basically Tic-Tocs between SoC providers (ideally) every year now. Which means on the balance, half of their portfolio is Samsung, and half will be other manufacturers.
Lots of really bad assumptions being made from this ZDNET article.
The announcement does not preclude that A9 will still be some kind of split between TSMC and Samsung, which is the whispered claim for the A8 – with the whisper being a 30/70 split.
And the reasoning here for 14nm versus 16nm versus 20nm is also not very accurate technically, unfortunately. More effort should be applied, IMO.
I’m not so sure of that logic. I don’t think Samsung’s chip production volumes are constrained, so I doubt producing a chip for Apple will reduce supplies for Galaxy Notes and tabs. Demand, however, is another story.
Also keep in mind that Samsung’s semiconductor business is a divisional peer of Samsung Electronics’ Telecommunications division that produces the Galaxy Notes and Tabs.
Really depends on how 20nm, 16nm and 14nm are actually measured. The 16/14 size might turn out to be the same equivalent sizes. Only Intel have been accurate so far, others have been fibbing a little for marketing reasons.
There is plenty of info on this at:
http://www.anandtech.com/show/8367/intels-14nm-technology-in-detail
Except Samsung Semi doesn’t fully satisfy Samsung Electronics supply needs. The Galaxy S, Note, and Tab lines use a mix of Samsung Exynos and Qualcomm Snapdragon chips. This doesn’t count the lesser devices that make up 60-70% of the Galaxy line that primarily (or entirely; too many models to check) use non-Samsung chips. SS does not supply the majority of chips to SE, but that could and likely would change if Apple released SE’s production capacity.
That makes even less sense. If Samsung Electronics’ Device Solution division was too busy to make chips for its IT & Mobile Communications division it wouldn’t be soliciting outside work. And if it does have capacity to spare, fabbing A9s for Apple isn’t going to hamper chip production for HHPs, which as you mention are already using chips from outside the company. BTW I think that’s for engineering and business reasons not supply limitations.
While it is true that both the Samsung Electronics CEO/co-Chairman and the Device Solutions CEO rose up through the Sys.LSI ranks, IT & Mob. Communications make up 55% of Samsung Electronics revenue. So I have trouble seeing any kind of favoritism towards the processor business if it adversely impacts the handheld phone business.
Samsung Semi solicits work from Apple because they pay top dollar and cash upfront. Samsung Group multiplies revenue through internal spending, but fresh revenue fuels growth. SG makes more money letting SS sell a premium chip to Apple for $10 while Samsung Electronics buy a lesser chip for $5. Keep in mind, the division CEOs are just managers; the Samsung Group is a chaebol run by one family. There is only one bottom line as far as they’re concerned.
But that scenario relies on Apple buying chips from Samsung Semi. If Apple cuts all ties, then it no longer makes sense for Samsung Elec to buy outside chips. That money going out for chips is no longer outweighed by money coming in for chips. They could try to find another buyer, but who makes enough premium devices to match Apple’s chip demands? Only Samsung Electronics. Again, they’d keep their factories running by producing for SE.