Samsung to build chip for iPhone

Samsung Electronics will manufacture the main chip in Apple’s next iPhone model, regaining a customer previously lost to Taiwan Semiconductor Manufacturing Co, people with direct knowledge of the matter said.

Samsung will start making Apple A9 processor chips at its Giheung plant in South Korea, the people said, asking not to be identified because the contract hasn’t been discussed publicly.

Additional orders will go to Samsung’s partner Globalfoundries, according to another person familiar with the arrangement.

Winning this order from Apple will help the world’s second-largest chipmaker rebound against TSMC, which last year ended Samsung’s monopoly over contracts to make iPhone and iPad chips. Both manufacturers have boosted capital expenditures to gain business from Apple and Qualcomm in the more than €273bn semiconductor industry.

The Apple order may lead to additional business, said Song Myung Sup, a Seoul-based analyst at HI Investment & Securities Co.

Kelly Yeo, a spokeswoman for Samsung, declined to comment. Kevin Kimbal, a Globalfoundries spokesman, said his company doesn’t comment on any customer relationships. Josh Rosenstock, an Apple spokesman, declined to comment. Elizabeth Sun, a spokeswoman for TSMC, declined to comment.

Apple picked TSMC to produce A8 processors for the iPhone 6 and iPhone 6 Plus devices. Those agreements came as the relationship between Apple and Samsung soured because of legal disputes dating to 2011.

Apple’s decision to turn back to the rival for supply of crucial components may vindicate Samsung’s investments in trying to grab the lead in manufacturing technology. Apple spent €23.5bn on chips last year, accounting for 7.6% of industry purchases, researcher Gartner said.

Bloomberg