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back to article Samsung shifts Apple A5 chip production to Texas

Apple's A5 chips are now being made in Texas, not Asia as was its predecessor the A4, according to a report from Reuters, citing "people familiar with the operation". The chips that power the iPad 2 and iPhone 4S areproduced by Apple's smartphone competitor Samsung in its huge fab in Austin, capital of the Oil State. Samsung …

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Anonymous Coward

Strange...

Texas has no income tax but high property tax -- an odd place to build a large factory.

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The county can waive or reduce property taxes. If you did your homework you would also realize that AMD, Intel and Freescale are also here.

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No ovine tax

Be still, my heart. And they can have guns. Wonder if they accept migrants...

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not really

Austin is home to one of the top universities in the world, and cost of living (and presumably land) is low. So it's easy and cheap to get qualified people to work in your high-tech factory, and quite likely costs less to buy the necessary real-estate than places such as California, Massachusetts, or New York.

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Tax breaks

I suspect dangling the possibility of a $9B investment would enable you negotiate a bit of a tax break.

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Silver badge
Linux

Homework

There's also that whole Texas Instruments outfit...

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It probably has something to do with the local RISC design talent. Nearly all of IBM's Power chip design work is done in Austin.... It doesn't seem like such a RISCy proposition when that is considered. Haha, get it, RISCy, see what I did there.

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Yes, I am sure they have a deal with the State to bring in that operation.

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Thumb Up

Yes, the chip baking process isn't as manually intensive as other types of manufacturing, so they largely do it in the US. The Chinese don't have the high tech infrastructure either. Plus, when you give your property (intellectual or otherwise) to communists, sometimes they don't want to give it back.

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@JEDIDIAH

They are mainly in DFW though. Samsung, AMD, Freescale and Intel are in Austin. Cirrus Logic is also in Austin, as is Global Foundaries and Silican Labratories. ARM is even here.

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Gold badge

Except that A5 is ARM based and the core design is licenced from ARM. Not much call for RISC designers on that front.

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Go

@Hungry Sean

Yeah, on top of a great Uni being on the doorstep, there are several other great engineering Unis withing 200 miles. The property taxes might be higher, but no income tax, a very business friendly environment and a reasonable sales tax helps make up for it. Then the housing is affordable to start with for the employees. Happy and well housed employees are happy/productive employees. :) What is a million dollar home in California (as an example) much of the time is only $200-350K in Texas. My own nice/modest house is on a 1/3 acre in town (ala not off in the far off burbs), and was still only $150K. :) Odd/unexpected consequence of low property taxes is higher property values, and hence roughly the same taxes getting paid to the state regardless... The taxes being on the property encourage the purchaser to stay within their means and not over-purchase, which also helped keep Texas real estate from melting down like what recently happened in much of the US, and had already happened to Texas once in 1987 when oil/real estate/banking went phfft.

I used to think that the high property tax sucked, but after having watched what has happened over the years, I changed my mind. I think it is better (for a state) to tax on property than to split the tax on property AND income. When the state does both, they end up taking the "boil the frog slowly" tactic and just keep raising both. The horror stories I've heard from the California refugees coming here about their tax burdens (on nearly every front) was also pretty eye opening. I'll take the high property tax and just be thankful now. I still pay less overall by a nice margin.

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re: Tax breaks

Yeah. "Jerry World" otherwise known as Cowboys Stadium in Arlington, TX not only got MASSIVE tax breaks, but the city of Arlington used its eminent domain powers to wipe out the communities standing in the way of the stadium being built and handed the land over to Jerry. :^( Unhappy days in Texas history that...

So yeah, tax breaks happen on big facilities to bring them in.

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Correction

"Austin, capital of the Oil State"

Errr, that would be "the Lone Star State". Nowadays the "Oil State" is most likely to be Alaska.

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Correction deflection

Missed by two states, err, provinces. How about Alberta? :)

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Errmm...

I'm from the UK but I thought Pennsylvania was the Oil State (also the Quaker State...)

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Pint

Texas was the:

Lone Star Republic from 1836-1844 (btw - thanks to the UK for national recognition there)

Lone Star State - from 1844 forward after treaty with US for Annexation into the US.

Oil was discovered in 1901, and Texas bassed corporations still control an awful lot of oil inside and outside Texas borders, but I've never heard it referred to as the "Oil State" outside of this article.

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Thumb Up

A6

My guess is that the A6 is being turned out here as well. And yes, Texas is the 'Lone Star State' but only second in oil production. Alaska, Texas and California are the top three in oil production.

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Devil

How about...

Wouldn't it be funny if Samsung "accidentally" messed up every A5 processor so they fail in 2 months?

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Anonymous Coward

Messing up the A5

If they did that then they would be sued out of existence in a trice.

To intentionally sabotage something you make would also earn the Samsing bosses a long stretch in Federal Pokey.

The whole Samsing empire would probably collapse within a few months.

Perhaps you would like to think again about your statement...

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Wouldn't it be funny if Samsung put $9bil into the US economy during a major IP litigation that revolves around a US companies IP and the sale of product based on these chips.

Of course it'll never effect the outcome, US law is above all that...

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Gold badge

Look up the case of the Nvidia mobile GPUs. They supplied duff parts to Apple and many others, Nvidia denied that Apple was affected but Apple found out otherwise.

I had my logic board replaced for free after my warranty had expired, it would have cost me around £300 otherwise. Guess who is paying for the repair? Nvidia, they decided to take a hit of $150-200 million!

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Boffin

Apple will not be purchasing many A5's with A6 probably being used for the Iphone 5

Is this a move by Samsung to withdraw production from Texas as the A5 vanishes?

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Anonymous Coward

I'm quite sure Apple will still be using A5s for a while... Even the A4 is still very popular.

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@Vendicar Decarian1

Samsung is dropping billions to build a new facility that is a little more flexible than just building chips for one fruity device. A plant like that is way too expensive to build and then abandon a year later. Samsung is increasing production in Texas, and I suspect it *might* go for the whole enchilada and build whole devices in the US (or within NAFTA) rather than having to have them shipped into the N America. That's purely speculative on my part though. Repeatedly shipping parts across the Pacific can't be cost effective if much of the process can be streamlined and get nice tax abatements inside the region you are selling into. Again, pure speculation on my part.

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Anonymous Coward

Makes sense

It's fairly close to Apples factory in Brazil

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Bronze badge
Happy

close?

Looking at a small globe you mean?

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Devil

The globe is small

The container shipment economy has made it small. There are however a number of disproportionately high cost elements. Crossing the Panama canal which is needed for Far-East to Brazil is one of those.

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Holmes

closer

Obviously I missed out 'comparatively'. Compared to being built in SE Asia

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WTF?

Isn't usually the other way round?

Where most fabs are moved to the Far East to reduce costs and duck the red tape in regards to fluorocarbon emissions?

Either way the Lone Star State must welcome the investment from Samsung, seeing as it's a household brand in the U.S.A. A nice but of Quid Pro Quo if you ask me.

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Joke

Baking chips

I used to live in Tx, and I hear they are in for a 20 year drought.

At least it'll be easier to bake chips, use solar power!

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Bronze badge

Also

Less chance of floods disrupting production.

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Pint

my chips are baked already...

Ummm, if you could send some water that would be nice... I would swear that half the US is getting flooded out of existence and the other half getting baked out...

You send water, I'll send beer! :)

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WTF?

Wowsers! - Gee Whilakers Batman! - Golly Mister Willlson!

Wow, that's surprising. Now, IF I can someday actually buy an iPad, or iPhone, or both, that has been totally and completely manufactured and assembled ALL in the USA - then I totally would. And I'd pay extra for them compared to the foreign assembled ones prices too (if there were both options offered).

And I hate apple with a passion too. So.. it would really really be a smart move on their part to actually make it happen. (Make absolutely entirely US made and assembled products available!)

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WTF?

re wowsers...

It would be more likely that Samsung is prepping to produce product in the US, since it won't be producing exclusively for Apple from that plant. Apple outsourced most mfg some time ago to Foxconn, so they Apple doesn't really have a definite choice where their product is manufactured, although they can send strongly worded letters, but it isn't like they can fire back up production after having ceased for so long. Samsung on the other hand, as a proper manufacturer can do the whole thing.

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Honourless Samsung, can you imagine Apple trading with...

...someone that humiliates it all over the world by pressing charges of "slavish" copying?

But Samsung just dont have the guts to show the finger to eveybody;s favourite underdog.

If Samsung were real men and not sissies, they wud have told Jobs and Co where to go for their CPUs and then we wud have seen the true Apple's mettle. But everybody's afraid of the little underdog that always goes for the throat and so Samsung is humiliated at one end and licks Apple at the other.

shame really.

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Anonymous Coward

ROTFL

"Underdog" ???

You get my TFM award.

That is the funniest thing I have read today. I would suggest you go and do some research as to just how BIG Apple actually is (and Samsung for that matter)

Describing APPL as an "underdog" is abuse of the term. From dictionary.com

1. the competitor least likely to win a fight or contest

2. a person in adversity or in a position of inferiority

I would submit that APPL is neither, despite being somewhat smaller than SAMSUNG.

Apple

Sales: 108 B

Operating Profit: 26 B

Emplyees 60,000

Samsung 2010 figures in USD

Sales: 220 B

Income: 21.2 B

Employees: 344,000

Of course, it might have been sarcasm, but I doubt it.

As for Samsung telling APPL "where to go", I suspect it will be the other way around after the currenet contracts are fulfilled. There are plenty of FABs to make ARM CPUs, and plenty of screen manufacturers as well - all of whom would love to be "in the game" with APPL.

Dweeb

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Playing the "patriotic" card?

Just imagine the press release: "Apple suing Samsung threatens American jobs"

Just a thought...

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Go

"patriotic" card indeed, and not just US/Texas related

This gets a bit crazy, and could be yet another issue against Apple. Since Apple doesn't employ any manufacturing itself anywhere (a huge hot button this election year), and Samsung actually does manufacture in the US with high paying jobs? Yeah, there is a chance that in an election year that Congress and the President could get involved and fall on Apple like a pack of wolves and take Samsung's side. Election years can get crazy as politicians try to prove they are "doing something" and Court cases be damned if #$!@ politicians step in... Too many variables going on. Apple - RETREAT!

Apple (among others) also might want to think about getting back into some manufacturing since it could end up on the slippery slope everywhere it does business. FoxConn does all the "real" work. That could spell even bigger trouble if a new IP related court case came up in China. The cases have come up on the rest of the planet... If you don't control at least some of your manufacturing and keep it geographically diverse, you can't control your ultimate destiny should unnatural (political/legal) or natural disasters occur. *cough* floods *cough*

I stick to my original stance that Apple in starting this patent war, has brought a knife to a browning machine gun fight since they don't have much in the way of engineering patents like Samsung does. There is a chance they'll make out ok, but it is increasingly looking bleak, and that it is time to settle everyone of these suits as quick as possible. Get back to business of making devices people want and get out of the business of suing companies over what appear to have been invalid patents.

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Childcatcher

Does anyone else find this odd?

Apple and Samsung are at each others throats in the courts all over the world.

Yet in Texas they are in bed with each other.

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