Samsung is moving forward with plans to invest $3.9 billion in the Texas chip foundry that makes the processors for the iPhone, despite reports that it may be losing Apple’s business in the near future. The Texas government has given the Korean electronics giant the green light to move forward with its expansion, meaning that production at the upgraded Austin facility could start as soon as the second half of 2013.
The iPhone 5’s A6 processor is made by Samsung in Austin, as is the A5 processor that powers the iPhone 4S and the iPad 2. But Samsung is Apple’s number one rival in the smartphone market and in courtrooms around the world, so it is hardly surprising that the iPhone maker is reportedly ditching Samsung as it specs its next device. Samsung’s contract to supply chips to Apple expires in 2014.
Samsung’s $3.9 billion investment shows that the company expects plenty of processor orders with or without Apple. Of course Samsung supplies chips for its own smartphones, as well as for a number of Chinese smartphone makers. The company also manufactures some of the chips designed by Qualcomm, which designs semiconductors but does not manufacture them.
Worldwide, Samsung is the world’s 9th largest chip foundry operator, but has the potential to invest in significant expansion. Several of its competitors have been badly bruised by the downturn in the memory chip market, but Samsung’s memeory chip losses pale in comparison to the huge profits in its smartphone business.
Samsung is not the only chipmaker investing in U.S. production facilities. Earlier this year, IBM and Global Foundries announced an agreement to make memory chips in New York.
Samsung currently has an estimated 50% of the global memory chip market, but in Austin the company is switching production capacity from memory chips to mobile processors. The plant’s memory chip division was closed earlier this year and workers are being retrained for mobile processor production. In addition, Samsung plans to bring on roughly 2,000 temporary employees to retrofit the plant.
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