iPhone 6: What Apple’s Alleged Chip-Making Deal With Samsung Means

iPhone 6: What Apple’s Alleged Chip-Making Deal With Samsung Means
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Will the iPhone 6 be out this year or next? That’s what everyone wants to know, and this morning there are reports that Apple Inc. (NASDAQ:AAPL) has signed a deal with Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) for its A9 chips, which are said to be intended for the iPhone 7.

iPhone 6: What Apple's Alleged Chip-Making Deal With Samsung Means

Does Apple’s numbering system really matter?

The report comes from The Korea Economic Daily, and it indicates that Samsung will be supplying the 14-nano A9 chips for Apple’s iPhone 7, which is expected to come out in the second half of 2015. There are a couple of interesting things in this report, the first of which has to do with Apple Inc. (NASDAQ:AAPL)’s numbering system.

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Speculation on release date of iPhone 6

Many have speculated that the iPhone 6 will be out this year, while others have said that the device will have much better technology than what Apple Inc. (NASDAQ:AAPL) is prepared to release this year. They believe the company needs more time to prepare the iPhone 6.

If the device numbering in this report from The Korea Economic Daily is correct (and it might be pure speculation), then we could indeed see Apple Inc. (NASDAQ:AAPL) skipping over an S update either this year or next. For example, if the iPhone 5S is out this year, then the iPhone 6 would be next year and the iPhone 7 would be in 2015. The alternative would be that the iPhone 6 comes out this year and then next year we have the iPhone 6S followed by the iPhone 7 in 2015.

Apple reported to be diversifying its supply chain

The report in the Korean publication also says that Apple Inc. (NASDAQ:AAPL) signed a deal with Taiwan Semiconductor Manufacturing Company (NYSE:TMC) for its A8 processors, which are to be used in the next generation iPhone. However, last month there were reports that the deal between Apple and TSMC was to last three years and cover the A8, A9 and A9x chips.

KGI analyst Mingchi Kuo said last week that Apple was diversifying it supply chain, which many thought meant breaking ties with Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), its biggest competitors. More than one site is speculating this morning that the company might use both Samsung and Taiwan Semiconductor Manufacturing Company (NYSE:TMC) to manufacture its chips in the future, and as Kuo said in last week’s report, using more than one manufacturer for its chips would enable Apple to demand lower prices from its suppliers.

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