Loss of Apple processor orders unlikely to affect Samsung

Eric Lin, DIGITIMES Research, Taipei [Friday 28 December 2012]

Apple reportedly plans to part company with its long-time partner Samsung Electronics. Apple has already reduced its chip orders to Samsung, and reportedly is set to move some or all processor manufacturing to a new foundry partner.

The potential loss of Apple's application processor (AP) orders, however, is unlikely to have a significant impact on Samsung's logic IC operation, according to Digitimes Research.

Samsung's logic IC business is expected to sustain its growth momentum riding on the back of robust sales of the company's smartphones and tablets, as well as other portable consumer products, Digitimes Research believes.

It is worth noting that Samsung's in-house capacity for APs currently fulfills only about 30% of the total demand for the firm's own-brand smartphones and tablets, while the majority of Samsung's AP production capacity satisfies demand for Apple's iPhone and iPad devices. If Apple withdraws its orders, Samsung will have more available capacity to produce chips for its branded mobile devices in 2013.

Samsung produces APs mainly for high-end products including the Galaxy S3, S2 and Note 2, with shipments for the devices expected to total 40-50 million units in 2012, Digitimes Research estimates. The Korean vendor sources APs for its other product series from Qualcomm, Nvidia, Broadcom, ST-Ericsson and Marvell.

Samsung's in-house produced AP shipments for its own-brand products will climb significantly to about 105 million units in 2013, accounting for more than 50% of the company's overall AP capacity, Digitimes Research predicts.

Source: Digitimes Research, December 2012