Samsung's Galaxy S6 success is hurting iPhone 7 supply

Samsung is the primary supplier of the iPhone 7 chipset, but it looks like Apple might need to find an alternative manufacturer, following the huge success of the Galaxy S6.

It is reportedly enlisting the help of Taiwan Semiconductor Manufacturing to build some of the chipsets, according to KGI Securities analyst Ming-Chi Kuo.

Apple started working with TSMC shortly after the Samsung court battles started happening in 2012. Even though Samsung remained a primary manufacturer, it looked almost certain TSMC would overtake by 2016, but then the court battles ended and Samsung regained control.

With the new surge in Galaxy S6 and S6 Edge orders, Samsung’s supplier GlobalFoundries will not be able to deliver the amount of chips needed for the iPhone 7 launch, which is coming in 2016.

It might also hurt the iPhone 6S supply line, although Samsung appears to be almost complete on the production end for this year’s chipsets. Apple normally orders components early, to avoid any delays when it comes to manufacturing and assembly.

These components are then sent to Foxconn and other manufacturing companies in China, and finally arrive in California where they are assembled. Having these three parts means Apple usually has already designed and tested the iPhone two years before its release.

Samsung’s chip making business is a big part of the company, but not enough to hold back on the Galaxy S6 supply. It already has 40 million pre-orders from carriers, and analysts expect that to reach 75 million by the summer of 2015.

Apple’s iPhone managed to set a new record for 74 million sales in the fourth quarter of 2014, surpassing Samsung’s current line of over 30 smartphones. This year, we expect Samsung will be back on top with the current Galaxy S6 trending worldwide.