Apple Inc. (NASDAQ:AAPL), in the usual schizophrenic manner of massive corporations, is simultaneously involved in brutal litigation with Samsung over the Korean firm’s blatant copycatting, and ordering advanced processors from the same company. Today, TechNews Taiwan reported that Samsung will probably not be used to manufacture the A8 processor, the next generation of mobile device processor which will be fitted to the iPhones and iPads of the future. However, Samsung is still slated to help produce the A9 processor in 2015.
Production of the A8 processor was to be divided between Samsung and Taiwan Semiconductor Manufacturing Company (TSMC). As recently as September 2013, it was thought that Samsung would fabricate 30 percent to 40 percent of total A8 production, with the balance of 60 to 70 percent made by TSMC. The plan was to gradually phase out Samsung production, due to the hostility between the firms, and switch processor manufacture over to TSMC in stages.
2014 is the first year of a three-year contractual period (2014, 2015, and 2016) during which TSMC has been hired by Apple Inc. (AAPL) to make the critical mobile chipset. Undoubtedly, if the Taiwanese firm performs satisfactorily, the contract will be renewed in 2016 to last several more years beyond that date.
However, today witnessed a major shift in the schedule. Though ironclad confirmation is still lacking, there is strong evidence that Samsung is being shunted out of 2014 production entirely, with 100 percent of A8 manufacture being carried out by TSMC instead. The reason for this is that Samsung is having difficulty meeting its manufacturing volume obligations, and, rather than risk a shortage of the critical components, Apple (AAPL) is moving all the production to a firm it trusts to get the job done thoroughly and in a timely manner.
Though cut from the short roster of A8 processor manufacturers, Samsung is still in line to produce 40 percent of next year’s more advanced processor, the A9. Whether it will be dropped from this project also is not known at the current date. Initial manufacture of the A9 would be handled by TSMC, with later production handed over to Samsung once its factories got up to speed. By that time, of course, it is possible that TSMC will have proven itself to Apple Inc. (AAPL) and will win the entire contract instead of sharing the spoils with its Korean competitor.
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