Samsung to produce A9 chips to be used in next Apple iPhone

Despite their rivalry in the smartphone market, Samsung has remained one of the key component suppliers to the iPhone maker.

In the latest development revealing their cooperation, Apple has tapped Samsung to manufacture its next-generation A9 chip to be used in its next iPhone, tech blog Re/Code reported, citing people with knowledge of the situation.

The A8 chips used in the iPhone 6 devices were primarily sourced from Taiwan Semiconductor Manufacturing Co (TSMC). Both TSMC and Samsung produced 20-nanometre A8 and A8X processors for the iPhone 6 and iPhone 6 Plus in 2014, though TSMC handled the bulk of the orders.

Apple signed a chip production deal with TSMC back in 2013 amid a number of lawsuits against Samsung over patent infringement. Apple also wanted to diversify its supply chain and reduce dependence on Samsung, which is ahead of Apple in terms of smartphone market share.

Apple's decision to select Samsung for A9 chips was due to the South Korean electronics giant's technological edge over TSMC in using the latest manufacturing process, says Re/Code.

Samsung could recently shrink the size of the transistors on its chips to 14 nanometres, while TSMC is still at 20 nanometres. Samsung's new chips take up very little space on devices, while providing more processing power with less power consumption.

The arrangement between the two companies was first reported by South Korea's Maeil Business Newspaper. Apple and Samsung declined to comment on the news.

Samsung, which has suffered from lower smartphone sales, is relying heavily on its chips division to maintain profitability. Therefore, it is important for Samsung to keep good relations with major customers such as Apple, which provide it with huge orders.