Apple's migration from Samsung boosts semiconductor business in 2013

Apple's migration from Samsung boosts semiconductor business in 2013

Summary: Apple's shift from Samsung as a semiconductor supplier is set to give pure-play semiconductor foundry market revenues a 21 percent boost compared to last year.

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TOPICS: Hardware
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As Apple shifts semiconductor manufacturing from arch legal rival Samsung to pure-play foundries, this will, according to a report by research firm IHS, "single-handedly boost the growth of the chip contract manufacturing market this year."

And it's not a small twitch of the needle either. According to the report, pure-play semiconductor foundry market revenue is set to grow by 21 percent compared to last year.

Compare this to the overall semiconductor industry, which is predicted to expand by a far more modest 5 percent, and you see

Pure-play foundry industries are already on track to hit these levels of growth this year, with revenue amounting to $8.2 billion in Q1 of this year, up 4 percent from $7.9 billion compared to Q4 last year.

"The growth outlook for the pure-play foundry business has risen considerably in anticipation of Apple’s transition of its applications processor chip manufacturing to third-party manufacturers," said Len Jelinek, director and chief analyst of semiconductor manufacturing at IHS.

"Previously, Apple had relied on Samsung as the primary supplier of applications processor chips for the iPhone and iPad. However, Samsung is not considered a pure-play foundry. Instead, it is designated as an integrated device manufacturer (IDM)—a chip supplier that not only builds products but also possesses design capabilities and sells devices under its own brand name, functions not performed by foundries."

"However, Apple’s anticipated shift is also the result of its well-publicized tiffs with Samsung over patent infringements on both makers’ smartphones that have strained relationships between the two," Jelinek added.

Despite predictions of strong growth, IDC also highlights a number of concerns. At the top of this list is the world economy. If consumers get jittery, then they'll stop buying consumer electronics, and this could cause the good luck to fizzle out.

Another threat to the pure-play foundries could come from IDMs such as Samsung and Intel. As these firms revamp their manufacturing models and move to new and more efficient lithographies, incumbent pure-play foundries find themselves caught up in an arms race with companies that have deep pockets.

According to IHS definitions, pure-play foundries are those that exclusively perform contract manufacturing of chips for other semiconductor suppliers, and this includes companies such as Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) and United Microelectronics Corp.

Topic: Hardware

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  • Real reason....

    The real reason to get away from Samsung is not because of any rivalries but to save money. They ditched recently the standard WiFi chip for a knock-off [and some had problems with it]. Now there is also talk of moving from Intel to the cheaper AMD.
    Gisabun