Apple iPad to play with Fire; Samsung keeps A5

By Jonny Evans

Apple's [AAPL] plan for a 7-inch iPad to take on Amazon's Kindle Fire seems to be moving along; meanwhile we learn its current generation A5 processors are being built at a multi-billion dollar factory in Texas -- by Samsung.

 

[ABOVE: Point A -- Is this Samsung's Apple processor factory?]

D.I.V.O.R.C.E. (it ain't easy)

Earlier this year we received convincing reports claiming Samsung was in the process of being ditched by Apple for the A-series processor supply contracts, not least in order to prevent the Korean firm from using a similar ARM-based reference design in its clearly imitative to at least this observer Galaxy products.

That Samsung continues manufacturing for Cupertino underlines the complexity of this divorce.

TSMC was reported to be in the frame for future chip production. Indeed this may remain the case as that firm is reported to be developing a new breed of super-thin, super power efficient A6 processors for future Apple devices.

Samsung's A5 processsor fab in Texas is reported to have cost $3.6 billion and to have gone into full production this month.

You don't need to guess that some lorry loads of these chips will be driving off to Foxconn's facilities in Brazil. Nearly all the output at Samsung's new factory is for Apple chips.

Twice as fast as the A4 processor used inside the iPhone 4 and iPad 1, the new A5 chips are used inside the iPhone 4S and iPad 2.

[ABOVE: Amazon's Kindle Fire commercial: is Apple really going to let its competitor lead its design?]

Kindle the fire

Will these new processors be used inside Apple's future Kindle Fire-killing 7-inch tablet? That's open to conjecture following this morning's Digitimes report claiming Apple plans to launch a 7.85-inch iPad just in time for Christmas...2012. (LG Display and AU Optronics will manufacture the displays).

The iPad 3 is still expected around March next year, with a smaller brother set to follow in Q4.

It's worth recalling that Steve Jobs openly derided 7-inch slates, calling them "tweeners" as the screens were too small to be useful. Then again, he never said this about the iPhone, so this can be regarded as one of Jobs' customary attempts to pour scorn on competitors.

"In order to cope with increasing market competition including the 7-inch Kindle Fire from Amazon and the launch of large-size smartphones from handset vendors, Apple has been persuaded into the development of 7.85-inch iPads," Digitimes reports.

Digitimes does seem to be attracting more than its usual share of Apple-related leaks these days. I'd be interested to learn who is informing the title and who it is the title is attempting to champion.

Is Apple set for another record quarter?

As I've previously anticipated, interest in Apple's products is at a high. An AlphaWise survey suggests the company will sell as many as 200 million iPhones next year, along with 81 million iPads.

Apple remains the king of tablet mountain and seems set to remain in that position. Android tablets are abject -- and expensive -- failures on the market, defined by fire sales, unsold inventories and write-downs on balance sheets. The only exception here is the Amazon Kindle Fire, which is securing the low end of the market, leaving Apple to grab the high.

This isn't just hyperbole. IDC claims that iPad market share has slipped slightly from 63.3 percent to 61.5 percent. (I hasten to observe that I'm not completely convinced at the veracity of IDC's figures).

"Amazon and Barnes & Noble are shaking up the media tablet market, and their success helps prove that there is an appetite for media tablets beyond Apple's iPad," said Tom Mainelli, research director, Mobile Connected Devices. "That said, I fully expect Apple to have its best-ever quarter in 4Q11, and in 2012 I think we'll see Apple's product begin to gain more traction outside of the consumer market, specifically with enterprise and education markets."

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[Below: Keeping it viral -- this seasonal iViral raises money for the LA Mission.]