Samsung and Apple reach a chip manufacturing agreement

Apple and Samsung have reached a chip manufacturing agreement. Worth billions of dollars, the deal will make Samsung the primary supplier of application processors for Apple from 2016 onwards.

The deal will see the Korean giant manufacture 80% of the application processors needed by Apple. The
remainder of the production will be handled by the
Taiwan-based TSMC. The latter handles most of
Cupertino’s chip manufacturing at the moment.

The agreement arrives shortly after Samsung and Apple agreed to drop all lawsuits against each other in outside
the United States. Unsurprisingly, Apple will continue to design its processors. Samsung will handle the
production of the 14nm chips in partnership with the
California-based semiconductor manufacturer
GlobalFoundries.

Application processors are significantly more profitable to manufacture than flash memory – another Samsung staple in demand from Apple. The revenue stream will allow the Korean company to make up for the declining profits from its smartphone operations.