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Samsung may spin-off its foundry business after losing Apple to TSMC

Samsung is well-regarded in the chip manufacturing business but this year, the company suffered a bit of a loss as Apple chose to go with TSMC for the creation of the iPhone 7’s A10 processor. This has been quite the blow to Samsung’s foundry division so going forward, Samsung may split up its chip design division from its manufacturing division, leaving the foundry completely separate in an effort to grow the business.

Samsung has been making chips for the iPhone for many years now, despite the continued lawsuits between Apple and Samsung. However, this year, Apple chose to go with TSMC for all orders of the iPhone 7’s A10 chip and current rumours indicate that Apple won’t be returning to Samsung for the A11 chip in the next iPhone. Given that Apple was one of Samsung’s largest clients in this area, the company is going to need to take steps to recover.

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In response, Samsung wants to split up its manufacturing business from its design business according to sources speaking with Business Korea. This means the division designing chips for Samsung won’t also be manufacturing chips for large clients, like Apple. This should help Samsung avoid competition concerns when seeking out new clients to replace Apple going forward.

It isn’t all doom and gloom for Samsung’s foundry either, as the company has a large deal with Qualcomm right now to co-produce the Snapdragon 835, which will be based on Samsung’s 10nm process and deliver higher performance and efficiency levels than ever before.

KitGuru Says: Given the intense competition between Samsung and Apple in the smartphone market, I am surprised that the two continued to work together for so long. Still, now it looks like Samsung is in a position where it needs to shuffle some things around to attract some new clients.

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