Yesterday, a report from The Times Union claimed that in addition to Samsung, Apple will now be signing GlobalFoundries to manufacture its custom designed A-Series chips used in the iPhone, iPad and iPod touch.
However, it appears that Samsung, and not Apple, is directly dealing with GlobalFoundries. Samsung will remain the primary supplier of Apple’s A-Series chips, but if it isn’t able to meet Apple’s demands, it will be using GlobalFoundries as a backup fab.
Sources close to the situation said the deal that appears to be taking shape looks more like this: Samsung will use GlobalFoundries for what is known as “flex capacity.” This is a long-standing industry practice under which a chip manufacturer pays to occasionally use another company’s factories when demand on their own factory is running higher than they would like, and they need a little help.[…] [GlobalFoundries] will be picking up the additional work on an as-needed basis. Samsung would basically hire GlobalFoundries as a subcontractor, and continue to manage the relationship with Apple. This is a very different business relationship than, say, if Apple were to tap GlobalFoundries as a “second source” for chips. Apple would of course have to give its blessing to the arrangement.
Samsung’s manufacturing plant in Austin, Texas is used to manufacture chips for its own smartphones as well, so it’s likely that the company’s facilities might not be able to meet demand at certain times. This explains why Samsung is helping GlobalFoundries set up the manufacturing processes at a Fab 8 facility in Malta, NY.
Apple has long been rumored to reduce its reliance on Samsung for its A-Series chips, possibly using TSMC as a manufacturer, but this agreement reinforces previous reports that said Samsung will continue manufacturing Apple’s future chips.