In a surprising move, Samsung Electronics is to start manufacturing chips for Apple’s iPhones at its US fabrication plant, marking an unusual collaboration between two fierce rivals.

Apple said Samsung’s facility in Austin, Texas will produce chips using a new, “world-first technology” designed to optimise the power and performance of Apple products, including the iPhone.

This initiative is part of Apple’s massive US$600 billion American Manufacturing Program aimed at boosting its supply chain and advanced manufacturing within the US over the next four years.

Industry sources suggest Samsung will produce advanced image sensors for the iPhone 18 lineup, a significant development as Apple has historically relied exclusively on Japan’s Sony for these components.

This partnership could diversify Apple’s supply chain and reduce exposure to tariffs and geopolitical risks, especially amid rising US trade pressures.

Samsung’s System LSI division, which makes CMOS image sensors under the ISOCELL brand, currently supplies sensors for Samsung’s Galaxy phones and Chinese brands like Xiaomi and Vivo but has yet to break Sony’s stronghold on Apple’s iPhone sensors.

The deal is a timely boost for Samsung’s struggling chip business.

Its logic chip and foundry divisions have posted significant losses recently, with analysts suggesting that supplying chips for Apple and Tesla (which recently signed a US$16.5 billion deal with Samsung) will drive a turnaround.

Market analysts predict the global image sensor market will grow from US$20.8 billion in 2024 to $26.5 billion by 2029, and Samsung’s expanded role with Apple could help it close the gap with current market leader Sony.

The partnership highlights both companies’ efforts to localise manufacturing amid increasing US tariffs.

Samsung’s US-based production could secure exemptions from the 100% tariffs recently announced by the US government on foreign-made chips.