Samsung broadens search for chip buyers after Apple withdrawal

Samsung is looking to break into the Chinese market by supplying chips as Apple begins to loosen its dependence on the rival firm.
Written by Charlie Osborne, Contributing Writer

According to reports, Samsung is seeking new allies in the tech industry by tapping emerging markets in order to sell its mobile processing chips.

samsung apple new clients chip ap processing china developing emerging markets

The smartphone and mobile processor manufacturer is considering a shift in to the Chinese and developing markets to combat future shortfalls as Apple turns to alternative sources for chips, reports Reuters.

Reports have suggested that the Cupertino giant has not only moved some of its supply chain -- silicon production, specifically -- to Taiwan Semiconductor Manufacturing Company (TSMC), but also that the iPad and iPhone maker is slowly lessening its reliance on Samsung for mobile processing chips after Samsung hiked up its prices by 20 percent.

The South Korean firm's mobile processors, or application processors (APs) currently power its own range of Galaxy mobile devices and Apple's iPhone and iPad tablet range. However, as the relationship between the two tech giants continues to become strained and the companies continue their global battles over patent infringement in courts worldwide, the danger of Apple pulling out of using its rival's APs could result in a steep revenue drop for Samsung.

Goldman Sachs estimates that Samsung's sales of AP chips will rise to 9.3 trillion won ($8.8 billion) in 2013. However, if Apple goes ahead and shifts 30 percent of its business away in 2014, then this could decline to a dismal 2.5 trillion won.

Stephen Woo, president of Samsung's System LSI business told the publication:

"As there are just two smartphone makers that are doing really well, chipmakers supplying them have grown in tandem. So we plan to bolster our relationship with those key customers. (We) should diversify our customer base and are making such efforts already, adding some Chinese customers."

Samsung recently invested a further $3.9 billion in an Austin., TX chip-making plant to cope with the increase in demand for its products due to the rising popularity of smartphones and tablets worldwide. Samsung's total investment in the plant is now over $13 billion since the plant went into operation in 1996.

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