Apple Taps Samsung to Make iPhone Chips at Its Texas Fab as the Foundry Battle Widens

Apple confirmed Wednesday that Samsung Electronics will produce chips for its iPhones at Samsung's fabrication plant in Austin, Texas, in a rare collaboration between two smartphone rivals that pulls Samsung deeper into Apple's supply chain and reshapes the US chip industry.

The announcement landed at a White House event where President Donald Trump spelled out plans for a 100 percent tariff on all chips, with exemptions for companies that build in the US or commit to doing so. Apple currently makes roughly 90 percent of its products in China and has been moving work stateside under reciprocal-tariff pressure.

What Apple Announced

In a statement, Apple said it is "working with Samsung at its fab in Austin, Texas, to launch a new technology for making chips, which has never been used before anywhere in the world." By bringing that technology to the US first, Apple said, the facility will supply chips that "optimize the power and performance of Apple products, including iPhone devices shipped all over the world."

The move is part of Apple's American Manufacturing Program, which now carries a total commitment of $600 billion over four years aimed at shoring up supply-chain resilience and advanced manufacturing inside the United States. Samsung declined to comment on the partnership.

For decades Apple has leaned almost entirely on Taiwan's TSMC to fabricate its A-series and M-series processors. Tapping Samsung Foundry for part of that work signals a deliberate push to diversify production at a moment when TSMC's advanced-node capacity is stretched thin and Washington is pressing major chip buyers to cut their reliance on Asian fabs.

The exact product is not fully clear. Apple executives have not said whether Samsung will make the main application processor for the iPhone or a supporting component. Industry analysts expect the first meaningful output to be image sensors, since Samsung's System LSI division already mass-produces CMOS sensors under the ISOCELL brand for its own Galaxy phones, as well as for Xiaomi, Vivo, and Motorola.

The timing is telling. Apple has spent more than a decade treating TSMC as its near-exclusive fabrication partner, and the two companies built the modern iPhone around each other. Shifting even a sliver of that work to a rival foundry is a departure Apple has never made with Samsung, whose Galaxy line competes head-on with the iPhone in every major market. That the two would now cooperate at the manufacturing layer shows how much tariff pressure and supply-chain anxiety have reordered the industry's relationships.

Analysts read the move as a hedge rather than a break. TSMC still holds the lead in the most advanced nodes and is unlikely to lose Apple's core A-series business anytime soon. But capacity at those leading-edge nodes is tight, and Apple's order is enormous — the company sells well north of 200 million iPhones a year and adds tens of millions of Macs and iPads on top. Any foundry that can absorb even a fraction of that volume gains a dependable revenue stream for years. Samsung, with a large US fab sitting in Austin that has had room to spare, fits that description better than most.

Why Image Sensors Matter

Park Yu-ak, an analyst at Kiwoom Securities, wrote in a July report that Samsung's semiconductor division is expected to narrow its operating losses by starting mass production of image sensors for Apple's iPhone 18 next year and by locking in new clients such as Tesla. Samsung already signed a $16.5 billion chip supply agreement with the US electric-vehicle maker, so a second anchor customer in Apple would give its loss-making logic-chip businesses a far steadier order book.

Apple has so far sourced every image sensor for its iPhones from Japan's Sony. Bringing Samsung in as a second supplier is a visible attempt to diversify, and the stakes are large. Apple ships well over 200 million iPhones a year. Sony held 51.6 percent of the image-sensor market last year, helped in large part by its deal with Apple, while Samsung followed with 15.4 percent and China's OmniVision took 11.9 percent.

Market tracker Omdia projects the global CMOS image-sensor market will grow from $20.8 billion in 2024 to roughly $26.5 billion by 2029. That is a category worth chasing, and one where Samsung believes it can finally grab share from Sony using the volumes that a single Apple contract brings.

A Lifeline for Samsung's Foundry Unit

Samsung's logic-chip and foundry divisions have been the weakest part of the group. In the second quarter of this year, the two units together are estimated to have posted an operating loss in the high-2-trillion-won range, or about $1.4 billion. The System LSI unit has struggled with slow adoption of its in-house Exynos application processors and flat image-sensor share, while the foundry arm has kept losing money on yield problems and fewer orders than it had hoped to win.

A deal with Apple changes the tone. Samsung Securities analyst Kim Kyoung-been said profit visibility for Samsung Electronics is improving heading into next year, pointing to flagship adoption of the Exynos 2600 and a foundry turnaround that should strengthen earnings momentum through 2026. Back-to-back wins with Apple and Tesla are exactly the validation the company needed after years of chasing TSMC from behind.

What It Means for the Industry

The Apple-Samsung arrangement is one more sign that the world's largest chip buyer no longer wants a single point of failure. TSMC still dominates advanced logic manufacturing, but its order book is full and its lead over rivals is exactly what Washington's tariff push is designed to shake up. Intel Foundry, which has spent years trying to climb back into contention, is also being courted by Apple for US-based production, and Google has separately discussed having Intel make some of its AI chips.

The practical effect is a foundry market that feels newly fluid. Samsung gets a marquee customer for a fab in Texas that had excess capacity. Apple gets a hedge against tariff risk and geopolitics. And Washington gets more advanced chipmaking on its own soil, even if the technology itself originated overseas. For the companies involved, the question is less about who wins the crown outright than about how many independent, commercially viable sources of supply can be stood up before the next disruption.

There are still open questions about how fast the work moves. A new process at an existing fab is not a quick flip — Samsung will need to qualify the line for whatever Apple wants to produce, and the first commercial shipments may not land until next year. The image-sensor path is the more direct one, since Samsung already runs CMOS sensor production and can adapt a line with less retooling. A full application-processor handoff would be a far heavier lift and is likely years out, if it happens at all.

The economics are not trivial. Running a modern fab is a multi-billion-dollar annual cost, so a foundry's survival depends on keeping utilization high. Samsung's Austin site, which has produced logic chips for years, has seen periods where demand wobbled and the cleanroom sat underused. A steady stream of Apple orders changes that math outright — it fills the line, spreads the fixed cost across more wafers, and gives Samsung the pricing confidence to plan its next node. For Apple, the offset is a second supplier it can hold up against TSMC in price talks, a bargaining chip it has rarely held.

The long-term prize is the same one that has defined the whole US reshoring push: a domestic chip sector that can absorb shocks without leaving the biggest device makers exposed to a single overseas bottleneck. Samsung's Austin fab, Apple's $600 billion commitment, and the tariff wall behind them all point in that direction.

Read more semiconductors coverage from the news desk.

Sources: Asianews.network reported the deal and Apple's statement; SamMobile and TechPowerUp covered the earlier talks between Apple, Intel, and Samsung Foundry.