Sworn friends: Why Apple and Samsung can not get along without each other




The fight Apple and Samsung – the most striking example of large-scale battles between large corporations. Beginning with the fierce competition of products, their struggle escalated into litigation in several countries around the world with billions of dollars of claims. But the interesting thing is that both companies are major partners and regularly entered into a massive deal for the supply of electronic components. Lenta reasons why eternal rivals can not do without each other.

Semiconductor “dragon”

Most people perceive Samsung Electronics as a company producing household appliances. This is only partly true: founded in 1969, “daughter” of the huge financial and industrial conglomerate Samsung Group, whose interests range from the medical and insurance to the construction of skyscrapers and supertankers, indeed initially engaged only consumer electronics.

However, already in 1974, Samsung Electronics has acquired Korea Semiconductor, one of the first and largest semiconductor manufacturing in South Korea. Semiconductor chips in their modern sense only then unfolded his victorious march. For comparison: “LSI” in 1974 was named a chip with 10 thousand transistors, now their multi-billion-processor usual smartphone.

By 2010, Samsung Electronics has grown into one of the largest semiconductor manufacturers in the world (including all types of memory chips, and processors), lithium batteries, LCD and OLED-screens. According to the agency IC Insights, for total production of semiconductor chips Samsung is second only to the company Intel, as in certain categories of products in the lead with a huge margin – so, in the segment of dynamic semiconductor memories (DRAM-memory) is behind the nearest competitor by more than half.
American apple

And the mass market consumer electronics company arises Apple – no less ambitious and extremely successful product. The first iPhone was sold in quantities of more than 6 million copies in five quarters. By the end of fiscal year 2010 the number of shipped iPhone has exceeded 70 million. And there is still the iPod and iPad.

High technology iPhone combined with the huge cost of such a device for circulation have specific requirements for component suppliers. Was to ensure a stable supply in exceptionally high volumes.

Fortunately for Apple, manufacturer, able to put the processors, memory and screens right quality in the right quantities, is found. Unfortunately for Apple, soon smartphones and tablets of the same manufacturer were the most serious competitors to the iPhone and iPad. This, of course, about the Samsung.
Problems sharing

In the first iPhone models use a processor, fully designed and manufactured in Samsung. With the Apple iPhone 4 uses proprietary processors, but they are available still only in Korean factories. In addition, Samsung delivers and supplies Apple RAM, flash memory, screens – but if these components are often ordered Apple and other manufacturers, the situation with the processor causes the Americans a serious headache.


Generally speaking, in the separation of the development and production of processors is nothing special: at the moment of the big companies only Intel and Samsung themselves and develop, and produce processors. Others, such as Qualcomm, AMD, NVIDIA and others, including Apple, engaged in the development and sale of chips, but production at the factory and bought – TSMC, UMC, GlobalFoundries and others.

Of course, Apple would rather not stop off to replenish the budget of its strongest competitor and move production of processors to another company. However, apparently, it is hampered by ambition – Apple, develops processor itself, clearly wants to simultaneously have the most advanced and topology circuits (defined not only speed but also the power consumption of the chip), and high yield serviceable chips (which largely depends on their cost price ), and millions of copies produced in a very short time.

Among contract manufacturing deal with such requirements are capable of very few. Although formally all the major semiconductor manufacturers regularly declare about mastering another modern process technology based on the most advanced topology, in practice, this usually means the release of the first experimental batch of specially prepared chips. When it comes to mass production of complex processing millions of copies, a high percentage of marriage puts an end to any commercial prospects of new products and line debugging takes many months.

So far the only achievement of Apple in an attempt to escape from Samsung – A8 chip for iPhone 6, available at the facilities of the Taiwanese factories TSMC. If we believe the company analysts IHS, eventually TSMC was able to put only about 60 percent of the order, and the remaining 40 percent habitually moved to Samsung.

One would expect that next year, all new chips for Apple A9 will be made TSMC, but judging by the latest news, this will not happen. As reported in October, Kim Ki Nam, president of the semiconductor business Samsung, the company has adjusted release processors for Apple’s latest 14-nanometer topology by the end of this year. This likely indicates that Samsung received minimum bulk of chips on the order Apple A9, if not all, the order in its entirety. In TSMC development close – 16 nm – the technology is planned for the third quarter of 2015, which is obviously too late for Apple. And though after claiming Samsung TSMC plans were adjusted, and the launch of production shifted to the second quarter, the technological and the time gap between the companies is still significant.
The third – not a superfluous?

But Samsung can not cut the Gordian knot of partnership and competition. Seemingly simple rejection of the contract for the supply of Apple components can seriously undermine a business competitor, clearing the market for its own smartphones. But it would mean a serious loss of revenue from the semiconductor business. And it is extremely profitable, and amid much sagging business smartphones Samsung does become a goose that lays golden eggs: the production of electronic components provided in the third quarter of 2014 56 per cent of the operating profit of the company, more than two billion dollars. Of course, voluntarily waive such money Samsung will not.

Further confuses the situation and the fact that Apple processors from an engineering point of view ahead of their own processor Samsung, sold under the brand name Exynos and used in a number of flagship models. If Samsung buys ready, already designed core processors from the company ARM Holdings, retrofitted them with the necessary peripherals and embodies in silicon, Apple designs their own kernels. As practice shows, in-house development with the right approach allows to obtain more efficient processors. Another biggest rival Samsung in the segment of mobile processors, the company Qualcomm, uses ready ARM core only in the models of the lower and middle levels, while the best model based on its own ARM-compatible kernel Krait.

Incidentally, Qualcomm may intervene in the already difficult relations between the two electronic giants. Mr. Kim Ki We were informed that the new production line will be released Samsung processors and for the company. On the one hand, Samsung will receive some preference in their procurement (Qualcomm processor used along with the Exynos Samsung smartphone models in secondary and tertiary level), the other – in the development of mobile processors Qualcomm is a direct competitor for Samsung, and for Apple, and extremely strong competitor.

So tangled skein continues further.

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