Although Apple designs and markets iOS devices, they don’t take part in the actual production. The parts come from various semiconductor companies in Japan, Taiwan, and South Korea mostly. They are then assembled into the finished product by Foxconn, a Taiwanese firm, in their China plant. Samsung is one of the major suppliers of iOS device parts, they produce the flash memory chips, the working memory chips and the main processors like the A6 on the iPhone 5 and A6X with Retina display on the iPad. As the Apple-Samsung relationship continues break down the companies face a set of problems.
The apparent breakdown in the Apple-Samsung relationship started with copyright infringement lawsuits, which Apple aimed at Samsung and eventual Countersuit move that Samsung made leaving hurt feelings and deep irreparable rifts between the two companies. The lawsuit accused Samsung’s Galaxy S and some tablets to infringe on iPhone 5’s and iPad’s patents. Being the closest rivals in the smart phone and tablet computer markets worldwide (Samsung also manufactures and sells smart phones and tablets very similar to Apple’s) doesn’t help.
Apple is now sourcing to some of the production of the A6 chip to Taiwan Semiconductor Manufacturing Company (TSMC) a part previously solely sourced from Samsung. It is rumored that the next generation of the A6, the A7 would be solely manufactured by TSMC breaking ties further with Samsung. The move, as the Apple-Samsung relationship deteriorates further could prove problematic for both companies though, since this could lead to Samsung losing Apple as one of its biggest semiconductor parts customer and affecting revenue while Apple could also face a dilemma in finding suppliers with the production volume capacity and quality that Samsung currently provides them.
The move will not be all good for TSMC either because it would force the company to allocate resources to cater to apple making them neglect and push away some of their current customers. TSMC is currently the biggest independent semiconductor producer. How this move by Apple would affect all three companies is still being speculated by market and tech experts.