Starting in 2016, Samsung will become the main supplier of application processors for Apple's iPhones and iPads, according to a report published Monday in the Korea Times. The agreement between the two companies -- which have faced each other more often in lawsuits in recent years -- is reportedly worth "billions," the paper reported.
The new deal would seem to indicate the start of a less litigious relationship between Samsung and Apple. In August, the two companies agreed to drop numerous cases against each other everywhere but in the U.S., where they continue to battle over their respective patents.
As reported in the Korea Times, under the new agreement Samsung would start providing Apple with 80 percent of the application processors it needs for its devices. The remainder would be supplied by Taiwan Semiconductor Manufacturing Company (TSMC).
Q3 Report Predicted Rebound
We reached out to both Samsung and Apple to learn more about the reported deal, but neither company responded in time for publication.
Samsung will produce Apple's application processors in cooperation with GlobalFoundries, a California-based maker of semiconductors, according to the Korea Times. Samsung is expected to begin making the processors in Korea next year, and will then expand production through both its Texas factory and the GlobalFoundries facility in New York.
In its third-quarter financial statement, released at the end of October, Samsung noted that its earnings from application processors had dropped due to lower demand. Overall, Samsung reported Q3 sales that were nearly 60 percent lower than in the second quarter. However, the company said that it expected to see an increased demand for application processors in the fourth quarter.
App Processors Driving Mobile Innovation
Application processors are to mobile devices what CPUs are to laptop and desktop computers. The consulting firm PwC has predicted that application processors are likely to see double-digit increases in speed through 2015, fueling ongoing innovations in mobile computing.
Ever-faster application processors will likely enable "more powerful multitasking operating systems, more immersive and natural user interfaces and more powerful graphics, including 3D," according to PwC.
As the Korea Times article noted, application processors also yield much higher margins for producers than do DRAMs (dynamic random-access memory) and NANDs.
This summer, Apple indicated it would diversify its supplier base for application processors through an agreement with TSMC. Samsung has continued to make some chips for Apple, but this new deal is likely to provide a much-needed financial shot in the arm for the struggling Korean firm.
Posted: 2014-11-23 @ 9:55pm PT
It is already on all major newspapers in South Korea. These are major newspaper companies like New York Times in the US. So it is true.
Posted: 2014-11-17 @ 8:03pm PT
@CK: Only time can tell for sure....
Posted: 2014-11-17 @ 7:59pm PT
How do we know this "news" is true or half true? Or just a way to influence the stock price?