Executive Briefings

The Love-Hate Relationship of Apple and Its Chip Supplier, Samsung

The chip manufacturing story has some compelling and awkward moments. For instance, Samsung managed to land Apple as its first massive computation chip customer when the original iPhone was heading to market. Apple needed someone to make the ARM chip that would give the iPhone its low-power consumption and zip, and Samsung said it was up to the task. Of course, the two companies are competitors now.

"Apple basically told Samsung what to do, and they designed and built the whole thing," says David Kanter, a chip industry consultant.

When sales of the iPhone exploded, Samsung morphed into a chip-making powerhouse. It needed to pump out tons of chips, which meant its factories were full. This scenario persisted as Apple released more iPhones and then iPads, all of which run on Samsung-made chips.

This arrangement has grown beyond awkward, however, as the years have progressed. Samsung is competing directly against Apple with its own smartphones and tablets, and the companies continue to sue each other over all kinds of things. It's a love-hate-make-up relationship.

Rumors say Apple may turn to Taiwan Semiconductor as a second chip supplier or migrate entirely to TSMC. But such a shift would come with serious consequences. "With Apple, it's not just about performance," Kanter says. "It's about having a supplier you can trust.

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Keywords: sourcing solutions, supply chain management, value chain, supplier base, trusted supplier networks

"Apple basically told Samsung what to do, and they designed and built the whole thing," says David Kanter, a chip industry consultant.

When sales of the iPhone exploded, Samsung morphed into a chip-making powerhouse. It needed to pump out tons of chips, which meant its factories were full. This scenario persisted as Apple released more iPhones and then iPads, all of which run on Samsung-made chips.

This arrangement has grown beyond awkward, however, as the years have progressed. Samsung is competing directly against Apple with its own smartphones and tablets, and the companies continue to sue each other over all kinds of things. It's a love-hate-make-up relationship.

Rumors say Apple may turn to Taiwan Semiconductor as a second chip supplier or migrate entirely to TSMC. But such a shift would come with serious consequences. "With Apple, it's not just about performance," Kanter says. "It's about having a supplier you can trust.

Read Full Article


Keywords: sourcing solutions, supply chain management, value chain, supplier base, trusted supplier networks