Samsung could split off chip business thanks to Apple snub – report

Samsung may be planning to spin off the manufacturing part of its System LSI business – that’s the division that makes chips for smartphones, including previous iPhone and Galaxy handsets.

According to a new report, Samsung is considering splitting the manufacturing business from the chip design segment – and Apple is supposedly to blame. Local news site Business Korea says Apple’s decision to abandon Samsung and use rival firm TSMC as its chief chip manufacturer has “raised awareness towards the need to separate the foundry business division”.

Samsung’s System LSI business is currently comprised of four different sections, as follows: (1) mobile chip development, (2) display driver and camera sensor design, (3) the chip manufacturing arm, and (4) the support team. The new report says Samsung wants to unite the chip development, display driver and camera sensor design teams, and separate them from the foundry business – that’s the bit that actually manufacturers the chips.

According to the report, the reorganisation is a bit “to grow the business more systematically” after the Apple snub. The history goes like this: Apple used to split production of its A-series chips between Samsung and Taiwan’s TSMC. But for the A10 chip, which feature in the iPhone 7, TSMC was the sole manufacturer. And rumour has it that Apple is going to abandon Samsung for the A11, expected to be used in next year’s iPhone 8.

This significant loss of business will likely have caused some serious turnover issues for Samsung, although it’s not clear how reliant Samsung was on Apple contracts. Fortunately, it’s not the end of the road for Samsung’s chip-making business by any means. For a start, Samsung still supplies chips for its own Galaxy smartphones, in an effort to reduce reliance on rival chip designer Qualcomm. And Samsung has also recently won a contract with Qualcomm to produce the Snapdragon 835 chip, which is likely to feature in many of next year’s flagship smartphones, potentially including the Samsung Galaxy S8, LG G6, OnePlus 4, and HTC 11.

However, it’s worth noting that the new information in Business Korea’s report has not been confirmed by Samsung, and even if the discussions are taking place, Samsung might still decide to retain its existing business structure.

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