Romance of Necessity
Apple's dependence on Samsung Electronics for mobile phone parts is growing. Previously, the U.S. tech giant curtailed the purchase of components for mobile phones made by the Korean company, stemming from patent disputes between the two firms. However, Apple is increasingly using parts produced by Samsung in its mobile phones again, following their mutual decision to withdraw patent lawsuits in other countries besides the U.S.
As the Korean firm has widened the gap with rival companies in application processors (APs), DRAM, and NAND flash through continuous technological innovations, the U.S. company has also decided to feature those parts in its new phones. Hence, observers say that both companies might begin a new honeymoon.
According to industry sources on Jan. 19, Apple has recently decided to request Samsung to manufacture 70 percent of A9 APs, core components for the iPhone 6S and iPhone 7.
The Korean company obtained all orders of APs for the iPhone series until 2012, but Taiwan Semiconductor Manufacturing Company (TSMC) started to produce most APs in the middle of patent lawsuits, owing to Apple's attempt to diversify suppliers. The ratio of chips used in the iPhone 6 made by TSMC or Samsung is close to 60:40.
Against this backdrop, Samsung's achievement in winning back a large proportion of AP orders for Apple's next products can be ascribed to the fact that the Korean firm's success in mass producing its own AP using the production process of 14 nm FinFETs for the first time, played a decisive role. The production process of 14 nm FinFETs can reduce power consumption up to 35 percent and decrease the dimensions of chips as much as 15 percent, compared to the existing production process of 20 nm FinFETs. Chip functions can improve by 20 percent as well.
Related to this issue, the Korean tech company is said to have already set a goal to boost productivity by improving the yield rate of the production process up to 80 percent within the first quarter of this year, from the current level of 60 to 70 percent.
Apple is increasing the weight of components produced by Samsung; not only APs, but also memory semiconductor parts. Currently, SK Hynix supplies half of the mobile DRAM used in the iPhone models, followed by Micron Technology and Samsung. Samsung, which started to supply mobile DRAM to Apple in the latter half of 2014, is expected to become the second-largest supplier soon, beating Micron, thanks to increased supplies of 20 nm DRAM.
The U.S. handset maker is also reportedly considering whether or not to add Samsung as one of the suppliers of NAND flash memory chips, which have been supplied by SK Hynix, Toshiba, and Sandisk so far.
Apple's move is attributable to the fact that Samsung is ahead of other companies in technology. An industry source explained, “The technical specifications of the iPhone models are improving, but it is hard to find a company that can meet the standards, aside from Samsung Electronics.”