Apple To Use Own Chips In Upcoming iPhone

In what will be something of a blow for electronics giant Samsung, Apple is expected to instead use an internally designed application processor (AP) in its two upcoming iPhones, according to a report in The Korea Times.

Apple Going Inhouse

Citing “a high-raking industry executive,” the paper reported: “iPhones have been using Samsung Electronics-produced APs that were partially designed by Apple engineers. But Apple has decided to use its own AP for its 4G models.”

The executive added, “That’s not good news, at least for Samsung Electronics’ system LSI business.” Samsung’s LSI business is said to still handle Apple’s less-volatile, non-memory-based chip business.

While the AP controls a device’s operating system and processes images, while DRAM (dynamic RAM) and NAND flash memory are tasked with reading, writing and storing data.

According to a September 2009 report from iSuppli, Apple’s iPhone business has been a significant source of income, and perhaps also bragging rights, for Samsung.

“Since the introduction of the first model in January 2007, Samsung has occupied the key applications processor slot in Apple’s iPhone line,” wrote iSuppli analyst Francis Sideco. “With the new 3G S model allowing the iPhone to gain share in the smartphone market, Samsung also is claiming a larger portion of stand-alone applications processor shipments.”

According to late-June pricing, Samsung’s processor accounted for $14.46 (£9.37) of the materials costs of the iPhone 3G S.

“The partnership between Apple and Samsung on the applications processor in the iPhone has been a major coup for Samsung, establishing it as a player in the market, and allowing it to challenge the incumbent leader, Texas Instruments,” Sideco wrote in September.

Likely disrupting this scenario for Samsung will be PA Semi, the processor-design company that Apple purchased in April 2008, which is expected to design the AP for the 4G iPhones.

iPhone 4G

Apple is expected to introduce an updated version of the iPhone for AT&T Wireless this June, keeping an annual tradition. According to a 29 March report from the Wall Street Journal, Apple may also be at work on a CDMA-based iPhone for Verizon Wireless. If true, the device is expected to appear in early 2011.

Verizon CEO Ivan Seidenberg has said that the carrier would like a version of the iPhone that can support its 4G LTE (Long-Term Evolution) technology, but that the decision is ultimately Apple’s.

“It’s [Apple’] call. Eventually it’s our view we’ll get to carrying Apple,” Seidenberg said during an 6 April press conference.

While Verizon plans to begin rolling out its LTE network this year, the Journal reported that rather than wait for the full deployment, Apple may just go ahead with a CDMA version of the iPhone.