Will This Apple Stunt Hurt Samsung?

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Apple (NASDAQ:AAPL) is likely to go through with its rumored transfer of mobile processor manufacturing away from Samsung to other foundries such as Taiwan Semiconductor (NYSE:TSM), according to Bernstein Research analyst Mark Newman. According to the analyst, Apple will shift part of the production to TSM, but not before “late 2013/early 2014,” as the chipmaker needs time to figure out the right production nodes and feature sizes that will support the iPhone maker’s goals, Barron’s said.

What Hints at a Possible Shift?

The analyst noted the possibility of a shift based on Apple’s recent strengthening of its in-house chip expertise. In addition, Samsung has pulled back on its foundry investments, pointing at a forthcoming change in strategy. While the Apple move will leave Samsung in risk of a shortfall in its logic chip fabrication, the worst-case scenario appears to be a minor blip for the Korean company, the analyst said.

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“We outline two key choices for both Samsung and Apple: Samsung can keep investing full steam ahead assuming 100 percent of Apple’s demand continues in 2014 and beyond or elects a more conservative expansion approach; and Apple can either renew its 100 percent volume commitment with Samsung or not,” Newman wrote in a note to investors, according to Barron’s.

In a scenario where Samsung keeps aggressively investing in its foundry and Apple suddenly moves away part or all its application processor business in 2014, Samsung will be left with idle capacity, the analyst explained.

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