Apple’s shift to TSMC for production of the A8 chip expected to debut in the iPhone 6 is hurting Samsung, reports the WSJ.

The news comes as Samsung reported a less-than-stellar quarter. It’s been losing market share in smartphones in the global market and even in China where Xiaomi has overtaken the company in terms of shipments.

Until last year, Samsung had a monopoly on producing Apple’s microprocessors; however, this year TSMC began shipping A-series chips that are used in iOS devices like iPhone and iPad.

Samsung admitted on their recent conference call that the outlook isn’t so bright for this business:

“Sales and profitability from System LSI (logic chip business) worsened as demand from main customers continued to decline,” said Robert Yi, Samsung’s head of investor relations.

Looking towards Q3, Yi said “System LSI business is expected to remain weak due to continued low demand from customers.”

To counter the low demand, Samsung says it will focus on improving profitability by expanding sales of other system chips —like image sensors—and work on cost reduction.

Notably, recent rumors suggest that the problem for Samsung may be temporary as they have allegedly secured orders of the A9 processor from Apple.


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