Apple funding “large portion” of Samsung’s Texas chip-making plant, says analyst

Apple funding “large portion” of Samsung’s Texas chip-making plant, says analyst

Despite courtroom battles between the two companies around the world, Apple still relies on Samsung to provide much of the components for its smartphone and tablet devices, so much so that it is believed that it has invested a significant amount in the Korean firm’s Texas-based chip making plant.

Samsung has formed a large part of Apple’s supply chain for its iPhone and iPad, manufacturing Flash and DRAM memory for the devices but it also fabricates Apple’s custom ARM-based A4 and A5 (and reportedly A6) processors, which power the company’s bestselling consumer electronic products.

Jefferies analyst Peter Misek believes that Apple isn’t just contributing to Samsung’s revenues, its investment in the company is helping to fund “a large portion of Samsung’s Austin fab (fabrication facility)” especially given the fact it is “manufacturing the upcoming quad-core A6 app processor there.”

Samsung’s 1.6 million square foot, $3.6 billion factory is the company’s second non-memory chip fabrication plant, the other located in South Korea.

However, given the animosity between the two companies, Apple is still cutting ties elsewhere.

Misek adds:

“All else equal, we see Samsung losing share in Apple’s supply chain and other Asia suppliers gaining share. We believe semi equipment could benefit from the increased order flow. We believe that in 2013 when Apple starts production of the A7 that the company will likely add TSMC as a supplier in addition to Samsung.”

Apple has been linked with TMSC previously, with the Cupertino-based technology giant reportedly issuing a trial to the company to manufacture its next generation A6 processors, moving production away to a non-competitive vendor.

Apple’s new A6 processor is expected to be a quad-core chip that will power the company’s next-generation iPad tablet which is tipped to launch on March 7 and come with LTE support.

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