It's Official: Samsung Is Inside of the Apple Inc. Watch

By Markets Fool.com

Thanks to a detailed Chipworks teardown, we now have confirmation that the applications processor inside of the Apple Watch is built by its arch-frenemy Samsung on its 28-nanometer LP technology -- a fact, to my knowledge, first reported by DigiTimes back in January.

Continue Reading Below

Now, Samsung building chips for Apple is nothing new. There are a couple of facts about this chip that I find particularly interesting that go beyond the company that Apple got to build it.

28-nanometer LP signals emphasis on cost
To my knowledge, Samsung offers tow variants of its 28-nanometer technology: a lower performance variant that uses polysilicon gates (similar to TSMC's 28nm LP), and a higher performance one that implements high-K metal gates.

The polysilicon variant of 28nm is lower performance, but it's also cheaper than the high-K metal gate variant. This signals to me that Apple may have wanted to keep its manufacturing costs as low as possible on this new device; not a surprise given that Apple is already forecasting margins for its Apple Watch category in aggregate of below-corporate average next quarter.

There's a lot of room for performance improvement
The two major drivers of the performance of a given chip subject to power constraints is driven by two factors. The first is in the quality of the chip implementation (competitiveness of the IP blocks, physical implementation, and much more), and the second is the underlying manufacturing technology.

The way I like to describe it is that manufacturing technology is an enabler of faster, lower power, and just generally more robust designs.

Continue Reading Below

I suspect that the next Apple Watch applications processor will move to either Samsung's 14-nanometer LPP technology or TSMC's 16-nanometer FinFET+ technology. This should allow Apple to include about twice as many transistors in the same area that the current Apple Watch takes up.

There's a lot of performance and functionality that could be added in with twice the transistor budget.

Additionally, the transistors themselves should be significantly more capable -- TSMC claims that its 16 FinFET+ technology can deliver 65% more performance or 70% lower power than its 28-nanometer HPm. Given that the Samsung 28nm LP is more in-line with TSMC's lower performance 28nm LP, the potential gains that Apple could see in moving from 28nm LP to 16 FinFET+ would be even greater.

It's just the beginning for Apple Watch
Frankly, it's quite impressive what Apple has been able to deliver with today's Apple Watch with an applications processor built on a very mature manufacturing node. With a more robust architecture, coupled with a move to a much better process, I'm expecting pretty phenomenal things in terms of performance and features from the next generation Apple Watch.

Apple's job, as well as the jobs of all of the developers who build applications for the Apple Watch, will be to find a way to take what will surely be an incredible amount of computing power to make the Apple Watch an indispensable part of our lives.

The good news, for consumers and Apple investors alike, is that if any company can pull it off, it's Apple.

The article It's Official: Samsung Is Inside of the Apple Inc. Watch originally appeared on Fool.com.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.