Galaxy S6 Sales Surge causes Apple to seek an alternate CPU provider

Apple is worried Samsung won't make enough chips for the next iPhone because the Galaxy S6 is suddenly doing better than expected

Business Insider By Lara O'Reilly
5 hours ago

Samsung Galaxy S6 and S6 Edge smartphones will exceed sales expectations, according to a new note from KGI analyst Ming-Chi Kuo, and that could hurt Apple's access to the A9 processors that Samsung produces for the next-generation iPhone. We first saw the news on Apple Insider.

Apple is worried that if Samsung's manufacturing unit will prioritize its Galaxy range over its orders.

Samsung needs all the good news it can get — its sales after the launch of the older Galaxy S5 models went into decline, so if the S6 range really is taking off — as Kuo says — then Samsung is likely to favor its own phones over those of Apple.

Kuo says that Samsung is expected to raise its shipment guidance for both the S6 and S6 Edge for the full year by roughly 40%, to 50-55 million units (up from 35-40 million units.) In the note, Kuo says the main driver is strong demand for the higher-end Galaxy S6 Edge device, which has a curved screen.

The success of the Samsung Galaxy S6 range is surprising for two reasons: Both phones are expensive and are up against record-breaking iPhone 6 and 6 Plus sales. And the Galaxy S6's predecessor the Samsung Galaxy S5 missed sales projections by miles in large part because the iPhone 6 blew it out of the water.

Samsung's head of mobile J.K. Shin said at a press event earlier this month that supply of the Galaxy S6 is likely to be constrained due to difficulties manufacturing the S6 Edge's curved screen.

Reports indicate that Samsung is contracted to build the majority of the 14-nanometer "A9" processor chips for the next generation iPhone. Kuo says that, partly as a result of the stronger market response for Samsung's smartphones, Apple is looking to move nearly a third of its A9 orders for its next generation iPhones over to another supplier, TSMC.

Another factor in the last-minute decision to recruit TSMC, AppleInsider reports, is that another of its current suppliers GlobalFoundries (which formed a partnership with Samsung last year to build semiconductors) is experiencing poor results on production of its next-generation CPU. Kuo also Apple's decision to switch to TSMC was also fuelled by its 16-nanometer FinFET Turbo design exceeding expectations on both yield rate and performance.


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