By Alexandra Burlacu | Sep 09, 2012 01:59 PM EDT
Apple has reportedly reduced its orders for memory chips from Samsung for its next-generation iPhone, in an effort to reduce its dependence on its archrival, according to several industry sources.
South Korea's Samsung Electronics is a core Apple supplier, producing micro processors, flat screens, and both DRAM (dynamic random access memory) and NAND memory chips, for Apple's iPhone, iPad and iPod. While Apple's lawyers fight a global battle against Samsung, the relationship between the two tech giants is complicated by this collaboration. Apple needs Samsung's memory chips and fabs, while Samsung's largest single customer is Apple.
Although Samsung has been a core supplier of both DRAM and NAND storage for Apple's gadgets, a Reuters report claims that Apple has been cutting its orders from Samsung in a bid to diversify its supply lines. Meanwhile, the Korea Economic Daily reported that Apple has not only reduced its orders, but had completely dropped Samsung from its list of memory chip suppliers for the first shipment of the next-generation iPhone. Instead, Apple reportedly chose to go with Japan-based Toshiba and Elpida Memory, and South Korea's SK Hynix.
Reuters' report, however, cites a "source with direct knowledge of the matter," who said that Samsung remains on Apple's list of initial suppliers for the new iPhone, and is making up for the reduction with orders from other handset makers. The source also noted that Apple's decision to reduce orders from Samsung was not related to the recent courtroom battles between the two companies.
"Samsung is still on the list of initial memory chip suppliers (for new iPhones)," the unnamed source told Reuters. "But Apple orders have been trending down and Samsung is making up for the reduced order from others, notably Samsung's handset business."
SK Hynix is the second largest DRAM manufacturer behind Samsung, which makes it a great candidate to replace Apple's archrival. On the other hand, Elpida is in the middle of bankruptcy, with shareholders considering whether Micron offers a high enough price to buy the firm.
Meanwhile, Apple reportedly tried to secure exclusivity earlier this year to Taiwan Semiconductor Manufacturing Co. smartphone chips by making a $1 billion investment in the chipmaker. The move was seen by some as an effort to replace Samsung's contract for the A6 processor. TMSC, however, reportedly rejected the offer, saying it did not need investment capital and had no desire to sell part of itself.
Apple later acquired Israeli startup Anobit, which makes flash memory chips for the iPhone, iPad and MacBook Air, for roughly $400-$500 million - one of Apple's largest acquisitions ever. This move was also seen as a bid to reduce its reliance on third-parties for vital hardware components.
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