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Samsung's 'Apple' chip rides iPhone market gains

Samsung expands its share of the global market for standalone smartphone applications processors due to rising sales of the iPhone, according to iSuppli.

Query: Who makes the Apple-branded chip in the iPhone? Answer: Samsung. This nontrivial detail translated into smartphone chip market share gains for Samsung in the second quarter, according to iSuppli.

Apple iPhone market share gains drove Samsung chip rise
Apple iPhone market share gains drove Samsung chip rise. Apple

The iPhone, largely due to the popularity of the 3GS model, accounted for 13.9 percent of global smartphone shipments in the second quarter, up from 10.1 percent in the first quarter, according to iSuppli. As a result, Samsung accounted for 15.9 percent of global revenue from sales of standalone applications processors. An applications processor is roughly analogous to the main Intel or Advanced Micro Devices processor in a PC: it is basically the brains of a smartphone.

Samsung's market share was up nearly 1 percent from the first quarter, iSuppli said, though it still trailed No. 1 supplier Texas Instruments. iSuppli defines a "standalone" applications processor as digital signal- or logic-based processors not integrated with the digital baseband function.

"Since the introduction of the first (iPhone) in January 2007, Samsung has occupied the key applications processor slot in Apple's iPhone line," Francis Sideco, principal analyst of wireless communications for iSuppli, said in a statement. "With the new 3GS model allowing the iPhone to gain share in the smartphone market, Samsung also is claiming a larger portion of standalone applications processor shipments."

As with previous iPhone models, the 3GS--introduced in June--integrates a Samsung processor based on the ARM architecture. The processor accounted for $14.46, or 8.4 percent, of the materials cost of the iPhone 3GS based on pricing in late June, iSuppli said.

"The partnership between Apple and Samsung on the applications processor in the iPhone has been a major coup for Samsung, establishing it as a player in the market and allowing it to challenge the incumbent leader, Texas Instruments," Sideco said.

The big question, however, is how long a good thing will last for Samsung. Sideco added that "there is a lot of speculation as to whether Apple's acquisition of PA Semi will change the parameters of this partnership." Apple announced its purchase of PA Semi in March 2008.

One of the most rapidly circulating rumors has Apple using a PA Semi design in the upcoming Apple tablet. The latest word is that the screen size is about 10 inches diagonally, meaning that a tablet will require more processor and graphics horsepower than a smaller device like the iPhone.

Although Texas Instruments lost some share to Samsung in the second quarter, the U.S. chip giant retained its dominant position in the market, with a share of 24.4 percent. "Texas Instruments continues to lead the market on the strength of its Open Multimedia Application Platform (OMAP) line of applications processors," Sideco said.