Samsung looks to China as Apple cuts chip orders

Samsung Corporate HQ (image 001)

Samsung is preparing for the day Apple – its rival and largest customer – stops placing orders with the South Korean corporation. Ahead of a CES keynote speech, a Samsung executive said it is looking to court Chinese smartphone makers which use the company’s own Exynos-branded chips.

After a string of contentious court battles, Apple is planning to untangle itself from Samsung, finding new suppliers. Although Apple is expected to spend $80 billion with Samsung for everything from CPUs, flash memory and flat screens, the paycheck could shrink 80 percent by 2017, according to a Wall Street analysis…

Stephen Woo, Samsung’s president for the unit making Apple processors, told Reuters Wednesday:

As there are just two smartphone makers that are doing really well, chipmakers supplying them have grown in tandem. So we plan to bolster our relationship with those key customers.

Among those key customers may be two Chinese smartphone makers. China’s Meizu and LePhone-maker Lenovo both use Samsung’s Exynos quad-core processor. Today at CES, the South Korean conglomerate announced a new eight-core mobile processor. Of note, Bill Clinton was in attendance of the news conference.

Dubbed the Exynos 5 Octa, it has four Cortex-A15 cores and four Cortex-A7 cores, switching between them to handle common workloads while providing better battery life. It also boasts twice the 3D performance of any previous mobile processor, including Samsung’s previous Exynos 4 Quad. The fourth-generation iPad uses the Apple-designed A6X processor with three GPU cores and two ARM Cortex-A15 CPU cores.

A6X floorplan (Chipworks 001)
The A6X floorplan, courtesy of Chipworks.

Samsung’s comments come amid more talk Apple is moving its mobile processor business. Earlier this month, a report surfaced suggesting the iPhone maker would use TSMC for its A6x processor.

Apple has outsourced all of its mobile chip manufacturing to Samsung, which produces iPhone, iPod and iPad processors according to its blueprints in the highly sophisticated $14 billion Austin, Texas facility, pictured below.

Samsung Austin plant

Speculation also arose that Apple plans to build a chip plant in Austin, Texas, perhaps in connection to CEO Tim Cook’s pledge to produce a Mac in the United States.

The Reuters article also notes Samsung is looking to diversify from simply offering mobile processors. The company recently purchased the UK-based CSR Plc for its cell phone modem and baseboard chip knowledge.

Currently, Qualcomm has 50 percent of the mobile baseband market – an area that could be attractive for a firm seeing its biggest customer walking away.