Apple is reportedly planning to use an internally designed application processor (AP) in its next-gen 4G iPhone.
The decision is expected to negatively affect Samsung, which has thus far supplied APs for Apple's 3G iPhone lineup.
"iPhones have been using Samsung Electronics-produced APs that were partially designed by Apple engineers," a high-ranking industry executive told The Korea Times.
"But Apple has decided to use its own AP for its 4G models.
Indeed, Apple has already deployed an indigenously designed A4 chip in its long-awaited iPad, a move which was widely attributed to the company's 2008 acquisition of PA Semi.
"Apple's action to put its own processors in strategic products is a blow to Samsung's system business," explained Prudential analyst Park Hyun.
"Overall, however, it won't see a profit decrease in its semiconductor business due to the upbeat mood in the global chip market."