If one is to believe “a source familiar with the deal” from Korea Times, then yes. It was announced recently that Apple and Samsung had signed a huge chip manufacturing deal for Samsung to fabricate 80% of all of Apple’s application processors (“AP” chips) by 2016.
“Apple has designated Samsung as the primary supplier of its next A-series chips powering iOS devices from 2016 as the alliance with GlobalFoundries (GF) enabled Samsung to cut off capacity risk,” a source familiar with the deal said.
It was speculated earlier this year that Apple would primarily drop Samusung as an AP chip supplier:
TSMC was expected to handle up to 70 percent of the manufacturing load, while Samsung would pick up the rest. Production problems may, however, have resulted in Samsung being removed completely from the A8 supply chain.
Samsung “being removed completely from the [Apple] supply chain” has been a fervent wish by many Apple fans since at least 2010, when they started to compete directly in smart phones. Invariability, every year since 2010 there is always some rumor that Apple is going to drop Samsung as a major AP chip supplier and every time that rumor ends up being false.
Part of the issue is that it is very hard to make a lot of complex chips quickly, efficiently and with very little defect rate. Initial capital expenditures and investments are prohibitive as well. For those type of manufacturers you have pretty much only four games in town: 1) Samsung 2) Taiwan Semiconductor (“TSMC”) 3) Globalfoundries and 4) Intel. Of the aforementioned, Intel has very little experience in mass fabricating smart phone AP chips. Samsung and Globalfoundries appeared to have foreseen the threat of TSMC and had thus gotten into a strategic partnership in April of this year. This relationship seems to have paid big dividends for both companies.
MarketInsider also has interesting information on why Samsung is in a superior position:
TSMC will ramp up production of chips using 16-nnometer FinFET technology. Samsung’s technology is better in terms of efficiency and energy consumption…. Bernstein Research in a note to clients. IM Investment, a local brokerage, expects Samsung to win more orders to fabricate customized chips from Qualcomm, Nvidia and Sony, helping it generate more revenue to make up for its struggling smartphone business.
On the flip side, this would appear as if Apple is throwing Samsung a lifeline while its profitability is declining. AP chip fabrication is difficult, but higher margin and as such is known to be among the most profitable of chip manufacturing jobs.