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Apple Inc. (NASDAQ:AAPL) to Attack Samsung



Apple Inc. (NASDAQ:AAPL) to Attack Samsung

7-22-2016

Preface
Apple Inc. (NASDAQ:AAPL) has found itself in the unenviable position of seeing revenue and net income shrink for the first time since it was on the brink of bankruptcy over a decade ago. But it does have one interesting competitive power over its rival Samsung, and Apple Inc. has just attacked.

STORY
While Apple Inc. and Samsung attack each other in the smartphone world with the iPhone and the Galaxy franchises, what is lesser known is that Samsung is in fact a powerful semi-conductor company. Samsung is so powerful, that it has been building the Apple Inc. "A-chip" for years -- the very chip that powers the Apple iPhone.

With competition heating up in the smartphone realm, that once friendly relationship between Apple Inc. and Samsung has turned sour, or better said, Apple has simply gone on the attack.

APPLE LOOKS TO WEAKEN SAMSUNG
The easiest way for Apple Inc. to attack Samsung is to take a large piece of revenue away from the firm without dealing in the smartphone realm and that's exactly what Apple has done. While Apple had been splitting the production for its A chips between Taiwan Semiconductor Mfg. Co. Ltd. (ADR)(NYSE:TSM) and Samsung for years, we just found out that Apple has gone to a single source for the iPhone 7 and the iPhone 8. In English, Apple Inc. attacks Samsung by taking all of its business away and going solely with TSM.

As Forbes so aptly points out:


If you consider the competitive smartphone ecosystem as a continual drain on resources that needs refreshed, Apple has throttled one of Samsung’s major sources that keeps it fresh, hungry, and able to innovate.

By virtue of pulling its A chip from Samsung, Apple Inc. has put more pressure on the Galaxy franchise. Make no mistake, the A chip was a large revenue producer for Samsung and in one fell swoop, it's all gone.

In the strange world of technology and "coopetition," Apple Inc. (NASDAQ:AAPL) has just gone on the attack and Taiwan Semiconductor Mfg. Co. Ltd. (ADR)(NYSE:TSM) gets the win.

WHY THIS MATTERS
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