Over the last few months, there have been conflicting media reports about whether Samsung Electronics Co. or Taiwan Semiconductor Mfg. Co. Ltd. (TSMC), the world's biggest chips contract manufacturer, would produce chips for Apple. An earlier report had claimed that Apple had chosen Samsung over TSMC as its chip supplier, while another recent report had stated that Apple had made a 'last-minute decision' to shift 30% of A9 chip production from Samsung to TSMC for its upcoming iPhone. Fresh reports now claim that Apple is turning to Samsung for the main processing chip and displays for the next iPhone, a move that could hurt its former partners like TSMC and SanDisk.

Prior to the legal disputes between Samsung and Apple that began from 2011, the Korean company used to manufacture the processors for all the previous iPhones. However, Apple entered into a deal with TSMC in 2013 to produce A8 processors for its iPhone 6 and iPhone 6 Plus devices, in order to diversify its supply chain resources and reduce its dependence on Samsung.

Both TSMC and Samsung have incurred massive capital expenditures to secure orders from Apple and Qualcomm Inc. in the more than $300 billion semiconductor industry. TSMC has invested a record $12 billion in plants and equipment, while Samsung incurred a capital expenditure of $3.7 billion towards its processor business in 2014 and could increase that to $4.9 billion in 2015. Samsung is also investing $15 billion in a new chip plant coming up outside Seoul.

Samsung uses an advanced 14-nanometer manufacturing process to produce smaller chips that consume less energy and provide more processing power, thus outpacing TSMC, which had earlier admitted that it would lose ground to Samsung in the most-advanced chip technology before reclaiming the upper hand in 2016. According to the latest report, Samsung will manufacture the main chip for the next iPhone, as well as displays for other Apple products. Apple's decision to choose Samsung was reportedly based on the Korean company's investment of $14 billion towards new plants and equipment for meeting its requirements, as well as its superior chip quality and performance in comparison to TSMC.