November 24, 2024

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[THE INVESTOR] Samsung Electronics will produce chips again for Apple’s new iPhone next year -- a crucial deal coming after the Korean tech giant lost iPhone orders to its Taiwanese foundry rival TSMC in 2013.

According to news reports on July 18, Samsung recently purchased extreme ultra violet lithography machines, the most advanced chip manufacturing equipment, to produce seven-nanometer mobile processors solely for iPhone.

Sources say Kwon Oh-hyun, one of Samsung’s three co-CEOs who oversees chip and other parts businesses, played a key role in clinching the deal during his visit to Apple’s headquarters last month.

“The CEO could persuade Apple’s top brass taking advantage of their close ties on OLED,” said an industry source. Samsung, the world’s largest mobile OLED maker with a whopping 95 percent market share, is the sole OLED supplier for the upcoming iPhone.

Samsung was a major chip producer for Apple until 2013 when TSMC became the sole maker for iPhone chips. TSMC succeeded in winning a supply deal for next year’s iPhone by adopting the more energy efficient seven-nanometer technology earlier than rivals.

The reports say Samsung would share some parts of the iPhone orders next year that have been monopolized by TSMC.

Samsung plans to complete its own tests for the new chip-making machines soon and seek final approval from Apple for the chip production.

TSMC, the world’s No. 1 foundry firm, took up a 50.6 percent market share in the global chip foundry sector with its revenue reaching US$28.8 million in 2016, followed by Global Foundry of the US with 9.6 percent, and Taiwan’s UMC with 8.1 percent, according to market research firm IHS. Samsung held a market share of 8.1 percent during the same year.

By Kim Young-won (wone0102@heraldcorp.com)