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Apple (NASDAQ: AAPL) Still Loves Samsung

Written By Jason Stutman

Posted July 15, 2013

A good friend of mine recently invited his ex-girlfriend over to his place. I didn’t think it was a good idea – they had split up just a month ago, and this wasn’t going to help him move a9

But I decided to keep my mouth shut, and I’m glad I did. Everything turned out better than expected. In the face of my pessimism, the two love birds are hitting things off once again.

I just hope it lasts this time around.

The truth is, breaking up is hard to do. Especially when you’ve been with someone for so long.

Two weeks ago, I wrote an article about Apple’s (NASDAQ: AAPL) next chip provider. The company had allegedly dropped Samsung (KSE:005930) for Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) as a provider of its A-Series chips.

TSM was to take Samsung’s place in 2014 and presumably continue providing chips for Apple in the future. However, what seemed like a full-on breakup at the time now looks more like a temporary separation – the Korea Economic Daily reported Sunday that Samsung will be providing A9 chips for Apple in 2015.

It is still unclear as to whether Apple will completely drop TSM or use chips from both Samsung and TSM simultaneously. In any case, the upside TSM once held as a result of its Apple partnership has largely faded.

On the Rebound

One of the biggest takeaways here is that Apple is looking to build smaller and faster.

Apple’s past deals with Samsung were for chips around 30 nanometers. Apple then dropped Samsung for TSM’s 20 nanometer chips and is now going back to Samsung for 14 nanometer chips.

These smaller processors mean smaller transistors that use less physical space and energy, allowing for faster-running and cooler devices.

Smaller transistors also mean Apple could potentially decrease the size of its A-Series wafers (wafers hold a collection of chips) and, in turn, build smaller devices.

Apple’s aggressive move towards smaller processors is just one more indicator that the company plans to establish itself in the smartwatch market…

There has been a lot of recent buzz surrounding Apple’s iWatch. The company has filed for iWatch trademarks in several countries and has also made hiring decisions indicating it is getting into the wearable market.

Apple recently hired Paul Deneve, the former CEO of fashion company Yves Saint Laurent, to work on “special projects” at Apple. It’s pretty safe to assume those projects have something to do with fashion.

Furthermore, the Financial Times has reported Apple is aggressively hiring new wearable engineering talent to help develop the iWatch.

Why Smartwatches?

Smartwatches offer consumers several benefits to their digital experience and are likely to become far more common than you might think.

First, a smartwatch allows users to view notifications without spending time on their phones. A smartwatch sits on your wrist, making notifications easily visible. This allows users to remain present in real-life social situations, while still being digitally connected.

Second, conventional watches have become increasingly irrelevant. After a quick visual survey of my office, there’s not a single person wearing a watch. When you can just check the time on your phone, the expense of a traditional watch no longer seems worth it. However, smartwatches offer a multitude of uses that re-justify the use of a watch.

Of course, some argue that watches are for fashion and ease of viewing, and I completely agree. But smartwatches offer that and then some.

If you’re skeptical about the ability for a smartwatch to look sleek or fashionable, just take a look at Vachen’s take on the wearable device:

vachen smartwatch

Apple shares are currently down 22 percent year to date. With the company diving into this young market, it could be looking at a strong and much-needed rebound.

Turning progress to profits,

  JS Sig

Jason Stutman

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