Apple (NASDAQ: AAPL) will use Samsung processors in its next iPhone, according to a new report. Further, Samsung is using its own modems in some models of its new Galaxy S6 smartphone instead of those from Qualcomm (NASDAQ:QCOM). The developments could help Samsung turn a $900 million loss last year into a $900 million gain this year in its non-memory semiconductor business, according to HI Investment.
Although the company sells everything from smartphones to refrigerators, Samsung also operates a massive chipset business, selling silicon to itself and other companies. And according to a number of reports, Samsung's chip business stands to make some major gains this year against rivals like Taiwan Semiconductor Manufacturing Co. (TSMC) and Qualcomm.
Specifically, according to a new report from Bloomberg citing unnamed sources, Apple plans to have Samsung build its A9 processor for its next iPhone. Apple likely will release its next iPhone in the fall, and it will likely be called the 6S, if Apple adheres to its existing naming scheme. Apple previously had used Samsung to manufacture its iPhone and iPad chips, but moved to TSMC for its current iPhone 6 and 6 Plus phones. Those phones have enjoyed massive success, with Apple reporting total iPhone sales of 74.5 million in its holiday quarter.
According to Bloomberg, representatives from Apple, Samsung and TSMC declined to comment.
If Apple does use Samsung silicon in its next iPhone, the deal would represent a major boon to Samsung. Apple spent $25.8 billion on chips last year, Bloomberg reported, citing figures from research firm Gartner.
Interestingly, Apple's move from TSMC to Samsung may have been foreshadowed by both companies: Samsung said earlier this year it would increase spending on its processor business in order to build thinner, more powerful processors, while executives from TSMC conceded last year the company would likely lose ground to Samsung in 2016.
In a separate but related bit of news, Samsung appears to have replaced Qualcomm's modems with its own modem in some versions of its new, flagship Galaxy S6 Android smartphone. On its website, AT&T (NYSE: T) said Samsung's S6 will use Samsung's Shannon 333 modem and not Qualcomm's modem. Similarly, an S6 teardown by Chipworks found a Samsung modem instead of a Qualcomm modem. Previous high-end Samsung smartphones have primarily relied on Qualcomm's modems.
"Samsung has always mixed up their vendors," Patrick Moorhead, an analyst with Moor Insights & Strategy, told the Wall Street Journal.
Samsung's move to its own modems in some versions of its new S6 is notable because the company also is using its own Exynos processor in the device rather than Qualcomm's Snapdragon processor. Samsung previously used Qualcomm processors in many of its recent major smartphone models.
Indeed, Qualcomm has warned that a major customer--presumably Samsung--decided not to use its latest Snapdragon 810 processor, a setback for the chipset giant.
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