As reported on Businessinsider.com
by Nicholas Carlson
But actually, Samsung also has a pretty big business making the guts of gadgets for other companies.
During the quarter that ended October 25, Samsung generated $8.2 billion in revenue through its semiconductor business. Samsung profited more than a billion dollars during the quarter on those revenues.
One of the companies Samsung makes semiconductors for is Apple.
In fact, Apple is a huge Samsung semiconductor customer.
The chart’s title is “Samsung Application Processor Production Allocation,” and this is what it looks like:
As you can see, Apple is a pretty big customer of Samsung’s gadget guts business.
But that’s all changing … and fast.
After a year in which Samsung smashed Apple’s grip on the smartphone market with with its incredibly popular Galaxy S3 and a huge marketing budget, Apple is in turn leveling its own bazooka at Samsung.
It’s taking its gadgets guts business elsewhere.
Today, news came out that Apple signed a deal with Taiwan Semiconductor Manufacturing Co (TSMC) to produce the A6 X microchips Apple puts in its newest iPads.
There have also been reports that Apple will begin outsourcing more chip manufacturing to Texas Instruments — or maybe even start building chips on its own.
By the end of 2014, Dediu and other Apple watchers expect Apple’s patronage of Samsung to be completely finished.
This will be a big blow to Samsung’s semiconductor business.
Here’s another chart from Dediu. Look at all that white space in 2014:
Over the past 12 months, Samsung revenues were ~$173 billion.
Its semiconductor business only accounted for $25 billion+ of that — and it included more than just microprocessors, but also memory upgrades, etc.
So Apple’s swift reduction is only a moderate-sized setback relative to Samsung’s overall revenues.
But it’s still a few billion dollars per quarter.
And that amount of money can add up after a while — especially if Samsung can’t keep up the momentum it’s created selling its own phones.