IPhone 5 Chip Overloads Samsung Production Capacity

http://www.infosyncworld.com/reviews/cell-phones/iphone-5-chip-overloads-production-capacity/11746.html

by ericmsimons • 15 years ago

45 43 15 years ago

nonane3• 15 years ago

Wow - talk about conflict of interest. So - Samsung knows the exact cpu specs for Apple's next gen iOS devices WHILE they're trying to compete with Apple on the Android platform with the Galaxy series.

I wonder how the Apple execs feel about this - it should make them a little uncomfortable knowing that their production line depends on a distributor who has a vested interest in a competing platform.

On the other hand, my impression is that Samsung is in the business of selling hardware for a profit. To them, it doesn't matter if they sell more hardware in the form of Galaxies or iPhones - as long as they're pushing out cpus/memory/lcds they don't care where it goes.

peregrine• 15 years ago

Samsung knows better then to breach a contract with someone like Apple. Especially when they are building $3 billion factory to support it. Also I am sure the division that designs phones is separate, contractually, from the division that designs/manufactures chips.

nonane3• 15 years ago

That makes sense.

It all roses for Samsung - they have their hands in both pots.

wmeredith• 15 years ago

I doubt that Apple is overly concerned about the specs thing for all the reasons already stated here, along with the fact that Apple products have (almost) never beaten their competitors on spec sheets, quite the opposite. It's the UX that's their strength; it's very hard to copy and they know it.

ergo982• 15 years ago

along with the fact that Apple products have (almost) never beaten their competitors on spec sheets

This is categorically untrue. The iPhone 3GS was a world above virtually every Android phone at the time. The iPhone 4, when released, didn't have quite as large of a lead, but it still led the competition on virtually every spec.

And those specs didn't go unnoticed. From screen brightness to color range to processor speed to GPU performance, this is one of the reasons it was considered the #1 device. It led the spec sheet.

The iPhone 5 of course has its work cut out for it, because the competition is much more refined now and they're really in the game. But I am pretty certain that Apple is going to try their damndest to lead the spec comparisons again.

michaelbuckbee• 15 years ago

I wonder if Samsung is even really that interested in seeing Galaxy succeed or if it's almost more profitable to them just to have it as a bargaining point in dealing with Apple.

Somewhat relevant, I actually got to play with a Galaxy over the weekend and was really impressed with it (I thought the form factor might be weird, but realized it's very close to a Kindle/Paperback book in size).

EnderMB• 15 years ago

Ever since Samsung released the original Galaxy i7500 they have had a terrible reputation from those who have had to live with their purchases. Samsung have shown that they are in the business of selling hardware, and that has been shown through their repeated lack of support. Groups like the GAOSP became extremely popular amongst Galaxy owners, and the same thing happened with the next generation of Galaxy phones.

I'd be shocked if Samsung kept their promise and kept the Galaxy Tab updated once it's not the "hot product" any more. I wouldn't call this a conflict of interest because if anything I would say that Samsung playing such a large part in Android's success only damages peoples perception of Android as a platform, and as an Android fan it saddens me.

dagw• 15 years ago

If Samsung is like most multi-national magecorp. conglomorates then there is probably very little connection between the cpu part and the phone part of the company. I'm sure the CPU people look at phone people as just another customer, and the phone people look on the CPU people as just another supplier. As you say the cpu people just care about their profit margins and probably have no incentive to hurt their bottom line to boost the bottom line of the phone division.

ergo982• 15 years ago

Samsung knows the exact cpu specs for Apple's next gen iOS devices

Samsung was a co-developer of the A4 chip, which they derived for their Hummingbird platform. You could as easily say that Apple knew what Samsung was up to.

flashgordon• 15 years ago

Hardly surprising. But aside from Apple paying bucket loads (I dont have a reasonable guess at this number but I am assuming a fair amount will go towards the 3.6Bn to build the new plant?) to Samsung for getting access to their production facilities, doesnt this offer by samsung effectively go against its own mobile plans? Or would samsung's reason be that Apple will get its production scale somehow/somewhere so it might as well be them?

jacques_chester5• 15 years ago

I didn't see any hard evidence. "Rumoured that", "leaks from sources" and "hinted" do not add up to the emphatic headline. But I guess we're talking about Apple rumours here: anything goes.

Anyhow, no such discussion can go without the obligatory posting of a link to the Apple Product Cycle: http://www.misterbg.org/AppleProductCycle/

hop• 15 years ago

Interesting they are building the chip fab in Austin - maybe they will be moving more manufacturing to the US. Must be more convenient too since Apple is designing the silicon.

Edit: Silicon, not livestrong bracelet material.

rabidsnail7• 15 years ago

I'm sorry, but I can't help myself. It's silicon. Silicone is a kind of synthetic rubber.

bane• 15 years ago

Austin has a very long history with semiconductors. No doubt the availability of capable employees and a local feeder school has played a large part in the equation.

thinkbohemian• 15 years ago

Any clue where they're getting their info on the Austin, Tx plant? (I live in ATX)

tpearson• 15 years ago

They're probably talking about the expansion of Samsung's Austin fab. http://www.prnewswire.com/news-releases/samsung-austin-semic...

rabidsnail7• 15 years ago

Why hasn't Apple built a fab yet? Do they still not produce enough iphones to be able to use the full capacity of a major chip fab (it would need to be major because they need to produce chips at high yield at 45nm)? Another company in Apple's position might build a fab and farm the extra capacity out to other companies, but that seems to go against Apple's dna. Still, I think it would make sense to pay some premium for the security of being sure their chip supplier won't decide to stop supplying them with chips.

jacques_chester5• 15 years ago

1. Fab-building is a nightmarishly expensive proposition, and worse, you need to keep on building them to keep up. I think that's a treadmill that Apple are happy to leave to their suppliers (Intel, TMSC, Samsung et al).

2. Intel might decide not to be such a good friend if Apple get into fabrication.

tesseract2• 15 years ago

I can't imagine Intel and Apple being on the greatest of terms right now anyway, due to the Nvidia integrated graphics situation.

rabidsnail7• 15 years ago

>> 1. Fab-building is a nightmarishly expensive proposition, and worse, you need to keep on building them to keep up. I think that's a treadmill that Apple are happy to leave to their suppliers (Intel, TMSC, Samsung et al).

Apple has the money, and if they can use the capacity the marginal cost of production should be lower for them, since there's not a third party taking a cut. Apple's also paying for the treadmill-running through their suppliers (unless they're getting chips at a loss, which I doubt). This is assuming Apple's internal demand is high enough to use the capacity of a whole fab.

>>2. Intel might decide not to be such a good friend if Apple get into fabrication.

If that's the case then Apple can threaten to tell on them. Intel has been down that road before, and I don't think they want to go there again. Also I think that, in the long term, Apple is trying to move away from Intel.

CamperBob• 15 years ago

I've often wondered why Apple doesn't just buy AMD.

rabidsnail7• 15 years ago

Or Freescale, who has more experience with small chips.

BvS• 15 years ago

Or ARM.

demallien• 15 years ago

I would imagine that this is the reason Apple likes to sit on a huge pile of money instead of giving it to investors. Any supplier that tries to put the hard word on Apple knows that they risk Apple massively investing in a competitor to get another source for components. Apple already has all of the silicon design know-how in house, I don't think they would have trouble finding another supplier if Samsung decided to be difficult.

jacques_chester5• 15 years ago

> I would imagine that this is the reason Apple likes to sit on a huge pile of money instead of giving it to investors.

Most investors want share price growth, not dividends, because in general taxes on capital gains are lower than those on income. Stockpiling cash has a positive or neutral effect on share prices. Paying it out in dividends merely annoys those who would prefer the price to go up.

patrickgzill• 15 years ago

Jobs got burned at NeXT in that he spent a huge amount of money on a highly automated, top of the line, assembly system; then due to under-utilization of that system, was never able to be profitable.

Far better to realize that Samsung, TSMC et al. will be able to have better pricing, since they can keep their fabs busy with multiple customers, with no sunk costs.

masklinn• 15 years ago

> Jobs got burned at NeXT in that he spent a huge amount of money on a highly automated, top of the line, assembly system; then due to under-utilization of that system, was never able to be profitable.

And one of the first things he did when back at apple was... get it out of fab altogether. A job which was in fact given to Tim Cook (widely considered to have done a stellar job at it).

GHFigs• 15 years ago

At this point Apple is such a big buyer of flash memory that for a supplier to cut them off would mean either cutting production or depressing prices, neither of which is good for them. I'm not sure how different it is for SoCs.

InclinedPlane2• 15 years ago

Why doesn't Apple own an Iron ore mine and run an Iron smelting operation? Why don't they produce their own LCD panels in-house? Who don't they have a Lithium mine and produce their own Li-Ion batteries?

For Apple's needs they are perfectly capable of relying on the market to provide most of their components. Apple has no expertise outside of hardware design, system integration, and software, they are best left to concentrate on where their expertise lies rather than trying to cannibalize the entire supply chain.

IPhone 5 Chip Overloads Samsung Production Capacity

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