Apple Inc. (NASDAQ:AAPL) typically plays its cards very close to the vest, announcing new products only when they are about to appear on the market. The firm is even more secretive when it comes to relations with other tech companies, such as Samsung. Nevertheless, various pieces of information can be key to making fairly accurate guesses about the broad brushstrokes of company policy in the immediate future.
One such indicator is the A-series processor family used in mobile devices such as the iPhone and iPad. Though the A7 is the most advanced chipset currently used in retail devices, the A8 is set to be released this year and the A9 will be present in consumer products starting in 2015.
From the perspective of consumer electronics rollouts, the A8 processor’s production through 2014 shows that the release of the iPhone 6 is imminent. The fact that A9 processors are being manufactured on a schedule that will make them available in 2015 indicates that the iPhone 7 will probably be released in that year. However, though stronger than the A7 to handle bigger displays and more advanced smartphone graphics, neither processor musters the power to handle desktop computing, meaning that Intel chipsets will continue to be used in new Mac products for at least the next two years.
On the business front, Apple’s (AAPL) choice of manufacturer for the processors reveals the tensions between the Cupertino, California firm and Samsung. Samsung Foundry has fabricated all processors used in Apple iPhones to date, starting with the Samsung 32-bit RISC ARM 1176JZ(F)-S v1.0 and continuing to the A7 processor used in today’s iPhone 5. However, Apple is now planning to hand 100 percent of A8 processor production to Taiwan’s TSMC, and as much as 60 percent of the A9’s production to the same firm.
This historic move signals Apple Inc.’s (AAPL) to draw down and ultimately sever its connection with Samsung. The Korean firm’s copycat production of smartphones and patenting of designs suspiciously similar to the Mac Mini and other proprietary Apple designs has apparently led to alienation between the two tech giants. Samsung, the favored producer for the processors of the first five generations of iPhones, is now to be phased out over the production life of the sixth and seventh, a massive shift in Apple policy.
This move could have severe consequences for Samsung, or it could signal the moment when the Korean electronics firm stops riding Apple’s (AAPL) coattails and flexes the muscles of its own maturity. The loss of reliable revenue from Apple’s processor purchases may constrict the flow of cash into Samsung’s coffers to some extent.
Furthermore, with the processors made elsewhere, it may be more difficult for Samsung to rapidly copy their functionality for their own mobile devices. Depending on the firm’s adaptability, this could signal a faltering of success or the touchstone for company executives and researchers to take their technology in new directions, capturing more profits through innovation.
Though nothing is written in stone, the processor plans of Apple Inc. (AAPL) may provide a useful window on future consumer and business developments. Watching the chipset arrangements pursued by the American electronics titan can reveal crucial information to analysts and investors. For example, the A8 and A9 processor manufacture plans confirm a high probability of iPhone releases in both 2014 and 2015. They also show a severing of long-standing ties between Apple and Samsung that could potentially have major consequences, especially for the Korean company.
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