Samsung strikes a deal with Apple to produce 80% of its A-series chips

A new rumor has sprouted that suggests that Apple has struck a major agreement with its chief rival in the mobile market, Samsung, in which the South Korean electronics giant will produce the vast majority of the A-series processors that Apple uses for its iPhones and iPads starting in 2016, according to Mac Rumors.

“Apple has designated Samsung as the primary supplier of its next A-series chips powering iOS devices from 2016 as the alliance with GlobalFoundries enabled Samsung to cut off capacity risk,” a source familiar with the deal told The Korea Times. The source suggests that Samsung will work alongside California-based GlobalFoundries to fabricate Apple’s A-series processors.

The chips that power Apple’s iPhones and iPads are designed by the American electronics giant itself, but Apple needs a manufacturing partner to actually build them. Traditionally, Samsung was that manufacturing partner, but Apple switched over to TSMC earlier this year. Now it looks like the Taiwanese company isn’t making the cut, so it’s back to Samsung for Apple.

Even though it’ll be manufacturing the vast majority of Apple’s chips again, Samsung still faces a few challenges in its own smartphone business, according to Business Insider. The company is facing intense competition from rivals such as Xiaomi and Lenovo who are putting out phones with similar high-end specs to Samsung smartphones, but at a significantly lower price.