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Is this the real reason Samsung won’t be making the iPhone 7’s A10 chip?

Published Dec 10th, 2015 5:45PM EST

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The iPhone 7 is going to pack an A10 chip that’s going to be even faster and more energy-efficient than its predecessor. It will also be a boon for any suppliers who win contracts to produce the new chip, although it seems Samsung isn’t going to be among them.

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Even though Apple is far from announcing the next-gen iPhone series, more and more reports paint a dire picture for Samsung when it comes to its iPhone supply deals. The company is said to have lost the A10 business to TSMC – in 2014, the Taiwanese company won all iPhone 6 orders, but in 2015 both Samsung and TSMC shared A9 chip orders from Apple.

The reason Apple is going with TSMC doesn’t seem to have anything to do with the fact that Samsung and Apple are fierce rivals in the mobile business. And it doesn’t appear to be related to the minor “chipgate” scandal from a few months ago.

Instead, Apple seems interested in TSMC’s advancements with InFO chip technology that would let the company create even slimmer devices.

According to Barrons, UBS is joining the ranks of analysts who think that Samsung has indeed lost the A10 supply deal to TSCM. UBS likes Samsung Electro-Mechanics’s progress with dual cameras and Samsung Pay, but these revenue sources will not be enough to offset losses from the missed iPhone 7 A10 supply deal.

“We think the negative will come from the mobile application processors substrate business starting in H216,” UBS wrote. “We believe TSMC could have close to a 100% market share in Apple’s new A processor (A10) foundry service in 2016 and use its Integrated Fan-Out (InFO) technology for packaging. With the InFO technology, we expect Apple would benefit from better performance with smaller form factors. If so, we think [Samsung Electro-Mechanics] would lose the IC substrates business for which it has been one of the suppliers, as InFO would not need IC substrates. We expect Fan-Out (FO) technology to be adopted over time by other application processors/system on chip (SoC) vendors, which could include Samsung LSI.”

UBS now has a 70,000 won price target for Samsung Electro-Mechanic, with the stock trading at 71,300 on Thursday.

Chris Smith Senior Writer

Chris Smith has been covering consumer electronics ever since the iPhone revolutionized the industry in 2008. When he’s not writing about the most recent tech news for BGR, he brings his entertainment expertise to Marvel’s Cinematic Universe and other blockbuster franchises.

Outside of work, you’ll catch him streaming almost every new movie and TV show release as soon as it's available.