Industry sources have indicated that Korean manufacturer Samsung could lose its supply contract for the manufacturing of application processors for Apple's 2014 iPhone.
According to DigiTimes, reports from the supply chain suggest Apple is expected to award the contract to Taiwan Semiconductor Manufacturing Company (TSMC). Industry sources have indicated that in order to satisfy the huge demand from Apple, TSMC has stepped up its construction plans and aims to be ready by the end of 2013.
The report suggests Samsung, which produces the application processors for the existing iPhones, will still manufacture chips for the upcoming model scheduled to be released in the second half of 2013.
Rumours of Apple's shift from Samsung to TSMC also surfaced on Apple Insider earlier this year, with reports from Korea suggesting the US computing giant's 'A7' processor will make its debut in the first half of 2014.
The Korean manufacturer is facing increasing pressure on the application processor front from other areas, with LG expected to enter the market in the future, while Chinese smartphone manufacturers have also indicated plans to produce application processors.
The next iPhone is expected to be announced in the second half of 2103 and rumoured to be a slight upgrade from the current handset, and not the next-generation iPhone 6, which is expected to be announced at the end of the year.
While being the sole supplier of micro-processors for Apple's iPhone and iPad, Samsung also provides dynamic random access memory and NAND-type memory chips and flat screens used in other Apple gadgets. Samsung claims 26% of the component cost of the iPhone comprises Samsung products.
Battlefield
Samsung and Apple have been involved in ugly spats over smartphone patents in the past. The US computing giant suffered a setback in the most recent court battle, as the $1.05 billion in damages awarded to Apple was slashed by 40% to $ 450.5 million.
A US judge awarded the massive damages claim to Apple after it found Samsung guilty of infringing on Apple's patents on smartphones. The trial is set to go ahead between 12 and 18 November.
The judge previously said the jury incorrectly calculated part of the damages and that a new trial would determine the actual, final amount.
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