Apple Falls Short Of Chips For iPhone 8, Ropes In Its Oldest Foe.

A story about tenacity, resourcefulness and humility

Earlier this year we’d written about how Apple seems to keep veering back to “arch-nemesis” Samsung every time it found itself in trouble on the Supply Chain front.

It’s a funny relationship — highly publicised animosity, lawsuits that leapfrog one to the other, and products that are clear competitors to each other’s wares, yet ape each other unabashedly — and yet, Apple and Samsung seem to find the same bed in times of dire need.

First, Apple purportedly turned to Samsung for the OLED screens that are expected to glam up the upcoming iPhone 8, and now it seems Samsung’s going to be providing another key component of the same iPhone 8 — the solid state memory chips!

Well, the three new iPhones — the iPhone 7S, iPhone 7S Plus and iPhone 8 (which is what the blogosphere is calling them) — expected this fall, are rumoured to come with 3D NAND chips for storage.

Apple has been using that tech since last year’s iPhone and it is one of the many reasons that the iPhones 7 are so fleet-footed. Word now is that Apple’s suppliers have failed to meet the demand needed for this year’s production numbers. The technology is still fairly new, and the reasons for the delay are not entirely articulated by Apple or anyone else in the know.

Word also is that Apple is being forced to turn to Samsung, its fiercest market rival, for satisfying Apple’s 3D NAND chip thirst.

So you know and understand the implications, I must chalk up a quick Electronics 101 lesson.

NAND memory is a type of non-volatile storage technology that does not require power to retain data and is used in almost all forms of solid-state storage. NAND memory is the secret sauce that resides in devices onto which large files are frequently uploaded and replaced — like your MP3 players, USB drives and smart devices.

As with every other piece of technology, NAND technology too, is being improved year after year, to accommodate more storage capacity, faster transmissions and to reduce the voltage demands of the memory — which leads us to… 3D NAND technology.

3D NAND uses a method for packing a much higher density of transistors in a similar volume of space as the NAND, by stacking memory cells vertically in multiple layers. Obviously, the charm is that this tech allows more memory in the same footprint; with devices becoming more and more svelte, manufacturers (especially those form factor-focused ones like Apple) it’s obvious that such growth in technology be harnessed as quickly as it can be mass-produced.

If all this tech talk sounds like mumbo-jumbo to you, all you need to take away is that 3D NAND tech costs less per GB of storage, reduces power consumption, boosts reliability and provides higher data write performance, and all which are the functionalities you’d want in your next big flagship, especially if you’re Apple and even more so, if you’re trying to do something special on an upcoming Anniversary Edition.

Back to the story at hand, word is that Apple’s primary suppliers of 3D NAND chips, SK Hynix and Toshiba, have fallen short by about 30%, due to poor yield. With the expected launch of September getting closer and closer, a bottleneck on the supply front is certainly not desirable for the iPhone maker.

Turning to Samsung was the obvious choice.

No details about how many chips Samsung would be providing Apple with have been released yet. As per reports, Apple currently buys up around 18% of the world’s supply of NAND chips. And if the iPhone 8 turns out to be a success, this percentage could increase.

Good thing Apple has the money to secure supply, even when production is not going as smooth as everyone would like for it to!

However, Apple’s not the only on in a jam. The problem of acquiring 3D NAND chips will be an affliction even for other players in the market — such as LG and Huawei whose products are standing in line for their quota of synapses. The word is that vendors are struggling with a lack of 3D NAND flash chips globally, and the shortage is not expected to improve until 2018.

While all this sounds gloomy and forbidding, it’s actually a manna from heaven for Samsung.

Beleaguered by the hole in revenues caused by the Note7 implosion last year, billions of dollars lost in PR and brand image, poor customer confidence that spilled over to other products in it’s arsenal and most embarrassingly, corporate troubles, Samsung had been drowning under an unprecedented wave of dip in it’s fortunes. This was the shot in the arm that Samsung needed.

And they seem to have grasped this opportunity with both hands.

The humungous success of the Galaxy S8 and Galaxy S8+, along with this surge in the 3D NAND chip demands for which Samsung is seemingly becoming the knight on a white steed, has helped Samsung refill it’s coffers and win back some bragging rights in the industry.

So if you’ve read about Samsung’s own estimation of a record quarterly operating profit for April-June, you know where a lion’s share of it came from. What’s even better is that analysts say that this revenue stream will continue to pad Samsung’s margins for the rest of the year.

At Chip-Monks, we applaud Samsung’s tenacity and especially love that Apple’s still got it’s humility about it, even if it’s all in the interest of profitability! Who cares? Partnerships that heal are inspirational.

Originally published at Chip-Monks.