Samsung is denying rumours that it had raised the prices of the application processors that Apple uses in its products by 20%. 

That rumour appeared in Korean newspaper Chosun Ilboon on Monday. That report claimed a person familiar with the negotiations between rivals Samsung and Apple had said: “Samsung Electronics recently asked Apple for a significant price raise in application process. Apple  first disapproved it, but finding no replacement supplier, it accepted the [20 per cent increase]”. 

A Samsung source has now denied this rumour, telling Seuul-based newspaper The Hankyoreh that prices are set at the beginning of the year and aren’t changed easily. 

On news of the rumoured price hike Piper Jaffray analyst Gene Munster speculated that the increase would hit Apple's gross margins by 1-2%, he suggested that Apple would “shift production to another vendor”, notes The Street. 

It is thought that Apple is already looking to TSMC and other suppliers to supply the chips it uses in the iPad and iPhone. Analysts believe that TSMC will take on Samsung's workload over the next couple of years, with production commencing in the fourth quarter of 2013. 

When the iPhone 5 launched it emerged that Apple is now designing the chips itself with Samsung merely building them. A Samsung official confirmed: "Samsung’s agreement with Apple is limited to manufacturing the A6 processors. Apple did all the design and we are just producing the chips on a foundry basis."

The custom-designed chips found on the iPhone, iPad, iPod touch and Apple TV are built by Samsung at its chip fabrication plant in Austin, Texus, writes Apple Insider. 

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