Samsung looks to diversify chip business amid Apple trouble

The company says it's inking deals to build mobile processors for Chinese companies to fill a void soon to be left by Apple.

Scott Stein/CNET

Samsung is already responding to Apple's seeming desire to reduce its reliance on its chief competitor for the production of mobile processors.

Stephen Woo, president of Samsung's Systems LSI division, which is charged with producing mobile processors, told Reuters in an interview published yesterday that his company is looking to "diversify our customer base." To do so, he said, Samsung has already added "some Chinese customers."

Woo admitted that the move is a response to Apple's waning reliance on Samsung for its chip-making needs. Apple pays Samsung about $8.8 billion for its mobile processors, representing about 80 percent of Samsung's business, according to data from Goldman Sachs. In the coming years, however, Apple is expected to go elsewhere with its business, and by 2017, reduce its orders to Samsung by 80 percent.

That transition is reportedly already in the works. Earlier this month, the Taiwan-based Commercial Times reported that Apple had agreed to initiate trial production with Taiwan Semiconductor of the A6X processor found in its fourth-generation iPad. If all goes well, Taiwan Semiconductor could receive the entire A6X order.

And Apple's transition has reportedly been in motion for quite some time. Apple and Samsung are currently embroiled in bitter patent disputes around the world, and Apple apparently despises the idea of paying its chief competitor both in those lawsuits and in the smartphone market in general.

Still, as Goldman Sachs notes, it'll take time for Apple to actually move its efforts elsewhere. Samsung has been a trusted processor partner with Apple for years and has shown a proficiency for building its processors. Finding out if other companies are up to the task takes a while.

About the author

Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.

 

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