Apple Brings Chip Manufacturing Closer to Home

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Apple’s A5 processor, the chip that lies at the heart of all the company’s latest iOS devices, has historically been made where nearly all of Apple’s components are made: Asia. Apple contracts with several Asian companies for many of the components for its products. Chinese company Foxconn, for example, is responsible for assembling most of Apple’s gadgets. Several Japanese companies are responsible for other parts as well. In fact, there has been much speculation that the delay in the release of this year’s iPhone 4S was due in large part to the tsunami’s influence on production from Japanese plants.

For its processors, Apple has long contracted with Korean-based Samsung. Historically, Samsung has manufactured its components overseas, mainly in Korea. Recently, however, the company that manufactures the chips has invested in a multi-billion dollar facility in Austin, Texas and have moved production of the component there.

In the peculiar way that large companies have of working together, Apple has remained one of the electronics giant’s biggest customers, despite the ongoing legal feud between the two over Samsung’s Galaxy Tab and Galaxy phones. Samsung has supplied Apple with the A5 chip since the launch of the iPad 2, the first device to carry it, earlier this year. At the same time, Samsung has been in fierce competition with Apple. Its Android-based Galaxy devices - especially the Galaxy Tab 10.1 and the just-launched Galaxy Nexus, are widely regarded as some of the strongest competition for Apple’s iPhone and iPad devices.

The facility, which cost roughly $3.6 billion and is expected to reach full production soon, is devoted almost entirely to the manufacture of Apple’s A5 chips, which are currently to be found in the iPad 2 and iPhone 4S. The chip, which has double the speed of its predecessor, the A4, was designed in-house by Apple.

[Source: Reuters]