Samsung's Processor Business Has iPhone to Thank, Says Report

 
 
By Michelle Maisto  |  Posted 2009-09-18
 
 
 

Samsung grew its share of the global market for stand-alone applications processor chips in the second quarter of 2009, for which it has the Apple iPhone to thank, according to a Sept. 18 report from iSuppli.
 
Texas Instruments continued to lead the market during the second quarter, though its market share fell from 27 percent in the first quarter of 2009 to 24.4 percent in the second. The biggest growth of all came from Japan's Renesas Technology, which boosted its 9.6 percent market share in the first quarter to 12 percent in the second-a result, states iSuppli, of inventory replenishments.
 
But it's Samsung, and its much-sought-after relationship with Apple, that iSuppli finds particularly noteworthy.
 
"Since the introduction of the first model in January 2007, Samsung has occupied the key applications processor slot in Apple's iPhone line," said Francis Sideco, iSuppli's principal analyst of wireless communications, in a statement. "With the new 3G S model allowing the iPhone to gain share in the smartphone market, Samsung also is claiming a larger portion of stand-alone applications processor shipments."
 
Samsung's processor, which is based on the Advanced RISC Machines (ARM) architecture, accounts for $14.46, or 8.4 percent, of the materials cost of the iPhone 3G S, based on its late-June pricing.
 

To view a teardown of the iPhone 3G S, click here.

iSuppli defines stand-alone applications processors as "digital signal- or logic-based processors that are optimized for and dedicated to supporting high-level operating systems as well as the processing of images, third-party applications and other multimedia content." They're used in higher-end smartphones that require considerable computing power to run sophisticated software.
 
"The partnership between Apple and Samsung on the applications processor in the iPhone has been a major coup for Samsung, establishing it as a player in the market, and allowing it to challenge the incumbent leader, Texas Instruments," said Sideco.
 
"While there is a lot speculation as to whether Apple's acquisition of PA Semi will change the parameters of this partnership, for now at least, Samsung's applications processors have a secure position in the product line."
 
Sources including Apple Insider have reported that Apple's 2008 purchase of the young chip maker was more for reasons of intellectual property than its products. If that continues to be so, Samsung can expect more blue skies, as iPhone acceptance has continued to grow, accounting for 13.9 percent of global smartphone shipments in the second quarter, up from 10.1 percent in the first quarter. iSuppli points out, however, that's Samsung's market share gains don't perfectly correlate to iPhone shipment growth, given variations in selling price and lead times between shipments and finished products.
 
Holding the fourth-place market share position during the second quarter was Marvell Technology Group, which fell slightly, from 7.7 percent in the first quarter of 2009 to 7.4 percent in the second. In fifth position was STMicroelectronics, which rose from 5.7 percent market share in the first quarter to 6.6 percent in the second.
 
In the second quarter of 2009, these five companies accounted for 66.3 percent of the market.


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