Is Apple left with no option but to have Samsung make its processors?

Apple's supply chain management has been the stuff of legends. It has been able to leverage its scale and influence to extract sweetheart deals that have enabled it to maximize its profit margins on devices.

That's becoming increasingly more difficult now due to the situation in the memory segment and the spillover effect in the wider supply chain. Apple finds itself in a situation where it may need to have someone other than TSMC make some of its processors, and it may have to turn to Samsung.

Apple has almost exclusively had its processors made at TSMC. It has remained one of TSMC's largest customers for years. TSMC is also the world's leading contract chip manufacturer and every major company wants their advanced chips to be made there.

It's now doing more business with AI chip companies thus reducing the capacity it can offer to other customers like Apple. The Wall Street Journal reports that Apple is now looking into the possibility of having some lower-end processors made by companies other than TSMC.

The list of viable options is very limited. Earlier reports have suggested that Apple could have some lower-end chips made by Intel on its 18A (1.8nm class) process. It remains to be seen, though, if yields and other factors of Intel's process are suitable for Apple's requirements.

Samsung is the second largest contract chipmaker after TSMC and is the natural second option for anyone who fails to secure capacity at TSMC. The company's 2nm process has progressed well and Apple could find a reliable solution at the Korean giant.

Apple has already confirmed that it will have some chips, believed to be CMOS image sensors, made at Samsung's Texas plant. So it's not entirely opposed to the idea of working with Samsung on this. If a deal for processors does material, it will be another major win for Samsung's foundry.