Samsung's New Texas Factory for A5 Chip Production Now Fully Operational

Reuters reports that Samsung, Apple's manufacturing partner for a number of components in its iOS devices, has completed work on a new factory in Austin, Texas that is handling production of the A5 system-on-a-chip found in the iPhone 4S and iPad 2. Samsung had announced the $3.6 billion project in June 2010, but has not publicly admitted that the facility is dedicated to producing components for Apple.

The A5 processor - the brain in the iPhone 4S and iPad 2 - is now made in a sprawling 1.6 million square feet factory in Austin owned by Korean electronics giant Samsung Electronics, according to people familiar with the operation.

One of the few major components to be sourced from within the United States, the A5 processor is built by Samsung in a newly constructed $3.6 billion non-memory chip production line that reached full production in early December.

The report's source indicates that nearly all of the factory's production, which encompasses non-memory chips such as the A5, is dedicated to Apple. The new factory is said to have resulted in 1,100 new employees being brought on by Samsung, which also employees 2,400 employees at a NAND flash memory factory in Austin.


Samsung factory in Austin (Source: Austin American-Statesman)
Samsung's significant investment in Austin to provide Apple with chips for the iPad 2 and iPhone 4S signals the importance the company places on the supply relationship even as the two companies are locked in a global intellectual property dispute involving Apple's iOS devices and Samsung's own Android-based mobile hardware.

Apple had been said to be moving production of its future A6 and A7 chips for iOS devices to Taiwan Semiconductor Manufacturing Company, but more recent reports have claimed that Apple will be sticking with Samsung for at least the A6 and that Samsung is already ramping up production of the A6 at the Austin facility.

With Samsung's Austin facility now fully online, the company appears poised to meet Apple's surging demand for iPhone and iPad products as it is already preparing for the next generations of those devices to land sometime next year, almost certainly to be led by the iPad 3 early in 2012.