Apple’s Chip Manufacturer Move Unlikely to Affect Samsung

If Apple decides to definitely stop sending Samsung processor orders, the South Korean manufacturer isn’t likely to be affected, a Digitimes Research estimation shows. Horace Dediu of Asymco was quick to take the numbers under his loop, only to find that the transition would end in 2014.

Apple has already reduced chip orders from Samsung, which was originally attributed to an alleged 20% rise in the cost of chip production, which was later denied by the manufacturer. What the estimations say is that Apple’s iPhone, iPod Touch and iPad consumed about 226 million processors in 2012, which is nearly 70% of Samsung’s current capacity.

“It is worth noting that Samsung’s in-house capacity for APs [application processors] currently fulfills only about 30% of the total demand for the firm’s own-brand smartphones and tablets, while the majority of Samsung’s AP production capacity satisfies demand for Apple’s iPhone and iPad devices. If Apple withdraws its orders, Samsung will have more available capacity to produce chips for its branded mobile devices in 2013,” Digitimes informs.

As you can see from the graph below, while Apple’s demand is expected to increase in 2013, this will likely be fulfilled by other players in its supply chain, as Samsung is expected to push its in-house products.

Screen-Shot-2012-12-28-at-12-28-9-1.57.37-AM

Now it remains to be seen whether Samsung’s microprocessor production exceeds that of Intel and which manufacturer will be picked up by Apple to supply its processors after the transition ends.

Technology enthusiast, rocker, biker and writer of iPhoneinCanada.ca. Follow me on Twitter or contact me via email: istvan@iphoneincanada.ca

  • sully54

    Capacity doesn’t not equal demand. Just because Samsung would now have the capacity to produce more chips for its own phones doesn’t mean they will because they need the demand to justify the supply.

    I’m not saying Samsung doesn’t have the demand. I certainly acknowledge that their dominating the industry. But that doesn’t mean that once Apple transitions from Samsung chips, demand for Samsung products automatically increase, this justifying the supply of chips.

    It’s simple economics.

  • Tombfyre

    I think what the author is trying to imply is that Samsung would have the capacity to bring more of their own stuff back in from outsourcing.