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Apple Inc. (NASDAQ:AAPL) To Source Chips For The 2018 iPhone From Samsung Electronics

A new report from the Korean Herald has revealed that Apple Inc. (NASDAQ:AAPL) will get chips for its 2018 iPhone from Samsung Electronics.

The Korean Herald stated that the two companies signed a deal earlier this week in which Samsung will continue the production of the A-series chips. The chips will be incorporated in iPhones in 2018 though it is not clear whether the deal will cater for more years to come. Samsung was the previous supplier of chips for Apple’s handsets but their partnership came to an end in 2013. The Korean giant lost the production rights to the Taiwan Semiconductor Manufacturing Company (TSMC).

The Korean Herald stated that it received the news about the Apple-Samsung deal from undisclosed sources. They revealed that Kwon Oh-Hyun, one of the executives at Samsung was one of the key people behind the deal. He had reportedly visited Apple’s headquarters in June, meaning there was a significant negotiation between the two companies.

“The CEO could persuade Apple’s top brass taking advantage of their close ties on OLED,” said one of the sources.

An interesting mix of rivalry and partnership

Samsung also occupies a large percent of the OLED industry and it also happens to be the exclusive provider of OLED displays for the upcoming iPhone. The new deal widens the portfolio of products that the Korean giant offers to Apple and further strengthens their relationship. This is a bit ironic considering that the two companies are currently the biggest rivals in the handset industry.

Samsung managed to secure the deal to supply chips for Apple’s iPhones mainly due to the fact that it managed to adopt the highly efficient seven-nanometer technology earlier than the rest of the competition. The company will supply a portion of the chips while TSMC will supply the rest since its contract will remain active. Samsung intends to carry out tests for the new machines for making the chips. It is currently waiting for Apple to give it the go-ahead to commence production.

Meanwhile, Samsung continues to enjoy massive success. It reported its most profitable quarter in history this year with operating profit hitting a record $8.7 billion. Most of its revenue was generated by its demi-conductor business which is fueled by the growing demand for chips.

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