Apple Sticks With Samsung for IPhone Chip, IFixit Says

Apple Inc. (AAPL)’s new iPhone 5s uses a microprocessor manufactured by Samsung Electronics Co. (005930), IFixit said, countering speculation that the world’s most-valuable technology company would move orders away from its largest competitor.

The iPhone 5s’s new A7 processor was made by Apple’s South Korean rival, according to a tear down of the handset by IFixit, which performs analysis of consumer electronics and sells repair parts. Applications processors are the main chip in smartphones and run all of the software that enable users to play games, send messages and more. Samsung has made all the previous chips in Apple’s A range of processors for the iPhone and iPad.

The decision to stick with Samsung underscores how difficult it is for Apple to reduce its reliance on the company that has become its biggest threat in the $280 billion smartphone business. Analysts and media reports have speculated that Apple would switch to using Taiwan Semiconductor Manufacturing Co. for the chip because of the rivalry.

Apple and Samsung are entangled in patent lawsuits globally. Samsung, the world’s largest phone maker, is also the biggest producer of memory chips, flat-panel displays and is trying to expand into the made-to-order chip business to compete with TSMC.

“Apple is saying Samsung has the best solution and as much as we’d like to diversify, we’re not willing to compromise the product,” Kyle Wiens, founder of IFixit, said in an interview.

Steve Dowling, a spokesman for Apple, didn’t immediately respond to a request for comment. Chris Goodhart, a spokeswoman for Samsung, declined to comment.

Future Shifts

Apple could still switch to TSMC down the line, Wiens said. TSMC, which is the biggest custom maker of chips, Globalfoundries Inc. and United Microelectronics Corp. (2303) are all vying for orders as other chip companies and device makers bow out of building their own components.

“Everyone is still expecting it to be TSMC at some point, it’s just a matter of when,” Wiens said. “When is not now.”

The iPhone 5s went on sale today worldwide, along with a cheaper new smartphone called the 5c. The debut of the handsets attracted long lines of shoppers globally. Opening-weekend sales are crucial to boosting Apple after almost a year without releasing a new device.

To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Ian King in San Francisco at ianking@bloomberg.net

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