New Samsung chips to give Apple boost

Samsung Electronics' newly upgraded application processor chips for the upcoming iPhone 7 are expected to boost the phone's efficiency by at least 30 per cent, sources said Monday.

"The iPhone 7 will become much, much faster, by up to 30 per cent," said one source, declining to be identified.

The new chips, to be supplied starting 2015, are equipped with 14-nanometer process technology, which in theory has double the efficiency of the current 28nm chips that Samsung supplies to Apple.

In December last year, Samsung Electronics said it successfully introduced the 14nm FinFET chip in collaboration with global companies like ARM, Cadence, Mentor and Synopsis. The new chip uses a novel 3-D design that reduces leakage to maintain power and reliability.

Other industry sources said the deal - most likely a three-year contract according to industry norm - between Samsung and Apple was signed in May.

Reports of the latest development between the world's top two technology firms came shortly after it was reported that Apple was ready to ease its reliance on Samsung by signing with Taiwan Semiconductor Manufacturing Co. for AP chips used in next year's iPhone models.

TSMC is the world's largest chip foundry company.

"Apple is a firm strongly driven by new and sharp technology. It probably felt TSMC was not going to be able to cut it with upgraded AP technology," said another expert, also speaking anonymously.

The repercussions of lagging chip technology are serious for smartphone makers, as it means they won't be able to upgrade to newer and more advanced phones.

"Samsung and Apple, they all have a mission, and that is to show that they have the wow power, the cutting-edge technology for beating the analysts' forecasts that the era of the smartphone is on the wane," said the expert.

Some believe Samsung is seeking to divert attention from its declining stock prices, which slid to a nine-month low last month.

"It needs to generate news that it's still getting better," analysts said.

Meanwhile, for Apple, gaining an edge against Samsung's Galaxy smartphones, which beat its iconic iPhones in global sales, is another priority.

Samsung doesn't want to lose its biggest customer for AP chips, either, as estimates show that Samsung's Apple-related sales reached 10 trillion won (S$11.24 billion) annually in 2011 and 2012.