Samsung To Produce 3/4 Of The Processors For Apple’s Next iPhone Models

Samsung and Apple may be fierce competitors in the phone making business, but they do have a working relationship. Indeed, it appears that Samsung, who is a producer of all types of consumer electronics, will build 75 percent of the processors that will be used by Apple, especially for its next line of iPhones. Well, at least according to a South Korean news report.

Maeil Business Newspaper, a news organization based in South Korea, has reported the story, even citing sources that claim to know of Samsung's and Apple's plans. According to the report, Samsung will be manufacturing the chips (unofficially nicknamed "A9") at its plant located in Austin, Texas. 

It is not like this has not happened before. For years, the South Korean has made the chip sets for mobile devices released by Apple. Of course, this is not exactly known to everyone, and it certainly helps that Apple has never been keen on making that fact as public as possible. Admittedly, it is surely awkward for Apple to have one its biggest competitors supply the processors for its flagship devices.

Apple has a lot of options when it comes to selecting a partner who can produce the processors it needs for its smartphones. Indeed, apart from Samsung, there is Taiwan Semiconductor and GlobalFoundries. But for some reason, Apple has not been able go to any of those alternative chip makers and finally do away with Samsung's involvement in its iPhone production. 

As for Samsung, building the processors for Apple's iPhones should be good business. With every iPhone that Apple sells in the market, Samsung gets a piece of the revenue. You can say that it is a sort of a win-win situation for Samsung. Not only can the South Korean tech giant make money from selling its own lineup of Galaxy mobile devices, it can also generate revenue from supplying the chip sets for every iPhone released out there.

But exactly how much revenue are we talking about? According to research firm IHS Technology, Apple paid a $30.3 billion amount for all the chip sets it needed for its devices in 2013. Of course, iPhone devices are just part of that number, but still, Apple's flagship devices definitely make up a very big portion of the products it released about two years ago. In addition, IHS Technology has stated that for every iPhone 6 and iPhone 6 Plus that Apple rolls out, the company pays $20 for the devices' chip sets. And it should be noted that the advanced specifications and features of the new iPhones mean higher costs compared to older iPhone models. In its final fiscal quarter that ended in September last year, Apple sold a total of 39.3 million units of iPhones, a significant portion of which is made up of the latest iPhone versions. 

That certainly is a lot. And Samsung definitely can view the idea of producing 75 percent of the iPhones' processors as a good business deal, regardless of the fact that Apple is its fiercest rival. Whether both Apple and Samsung like it or not, it seems that they will continue to be bedfellows for the time being, that is until the former can find a better chip producer.