Apple's processor ( A5 chip ) is built by Samsung ‎ !

While Apple and Samsung battle it out in the courts over the design of the iPad compared to the Galaxy Tab, and vie for top spot in the smartphone market, the US company is relying on its rival for the essential processor in its tablet.

The A5 processor – used in the iPhone 4S and iPad 2 – is now made in a sprawling factory in Austin, Texas, which is owned by Korean electronics giant Samsung, according to people familiar with the operation.



One of the few major components to be sourced from within the US, the A5 processor is built by Samsung in a newly constructed $3.6bn non-memory chip production line that reached full production in early December.



Nearly all of the output of the non-memory chip production from the factory is dedicated to producing Apple chips, one of the people said. Samsung also produces NAND flash memory chips in Austin.

The South Korean giant began supplying the A5 processors to Apple from the Austin plant this year, the people said.

Apple declined to comment, saying it does not detail supplier relationships. A Samsung spokeswoman declined to comment on its customers and the specification of the chips made in its Austin plant, but said the company expanded the factory to include a production line to make logic chips. The A5 is one such chip.

The powerful A5 processor, which uses technology licensed from Britain's ARM Holdings, is designed by Apple in California, by a team formerly part of PA Semi – an American chip design company that Apple bought in April 2008.

The A5 chip debuted in Apple's iPad 2 in March and now also powers the new iPhone 4S. The chip is twice as fast as its predecessor, the A4, which is also made by Samsung, according to reports from teardown firms that have taken Apple's devices apart.

Apart from Austin, Samsung has only one other non-memory logic chip factory, in South Korea.

Apple relies on its main contract manufacturer for gadgets, Foxconn, to assemble them, mainly in its factories in China and Taiwan.

Semiconductor companies are attracted to Austin because of a steady supply of educated employees from the University of Texas' engineering school. Also based in Austin are Freescale Semiconductor and other chip companies such as ARM, Intel and Advanced Micro Devices.

Samsung has added about 1,100 jobs to support the new non-memory chip production in the factory, which produces 40,000 silicon wafers every month, a Samsung spokeswoman said. The rest of the 2,400 employees in Samsung's Austin location work in its NAND flash memory factory by the logic chip factory, she said.

The Korean company, which began the US plant in 1996 to make its NAND flash memory chips, continues to produce them there alongside the A5.

Samsung's factory is the largest foreign investment in Texas with a total investment of about $9bn, according to the Austin Chamber of Commerce.

Austin is also home to an Apple customer call centre that deals with customer complaints in North America, Apple's biggest market. The Cupertino company employs thousands in that facility, who deal with calls ranging from complaints to support.