Apple Inc. is expected to purchase $7.8 billion worth of components used for iPhones, iPods, and iPads from Samsung in 2011, the Korea Economic Daily reported Monday, citing industry sources. If the deal goes through, Apple will become Samsung’s largest customer.
“The paper also said that Samsung will supply Apple with liquid crystal displays, mobile application processors and NAND flash memory chips used for the U.S. company’s iPhones and iPads,” Jung-Ah Lee reports for Dow Jones Newswires.
Full article here.
just buy them already…
No good. Analysts say Apple should give out dividends instead of buying components.
I know Apple is first and foremost profit making business and right now it is cheaper to buy stuff in Asia. However the US is rapidly losing the capacity to manufacture anything:
http://www.nytimes.com/2011/02/13/business/13every.html?_r=1&partner=rss&emc=rss
If companies like Apple don’t invest in the US, it will have dire long term consequences for the country.
@Boghog
Name one US company that currently manufactures the components that Apple requires, in sufficient quantity, inside the the US.
So just how is Apple supposed to buy American when there is no product, or insufficient product, that meets Apple’s needs?
You know there is a “Reply” button now right? Everything shows up threaded so we no longer have to do the @ thing anymore.
You are right in that the US just doesn’t manufacture these things, except maybe NAND. Sandisk is a US company, though I’m not sure if they actually manufacture the things they design. Please enlighten me if you know.
That being said, a lot of the factories that go to produce these things are built because of these orders, so the possibility to build a factory in the US is there. Now if we could just keep the unions out, it might be viable, like Toyota and Honda doing US manufacturing.
You’re right. I’m still not used to the new site. Thanks for pointing that out.
You’re also right that it is partially a factor of labour costs. We couldn’t afford our Apple products if they were actually produced outside of east Asia.
Sorry, I left out one very important point. If the designers become too far removed from the manufacturing, it starts to negatively impact the designers ability to innovate. This is not only bad for the country, it could eventually prove fatal to Apple. The next Apple could very well be in Asia. The New York Times article linked above is a very good read.
Samsung are fscking enourmous. I do a lot of work for SHI (Samsung Heavy Industries). Their shipyard in Geoje is the size of a small city. Alas, I can’t use my MacBook there as they are super-paranoid and no cameras are allowed in (including iSight-equipped Macs).
7.8 billion for parts
5 billion for labor and marketing
20 billion for a ROI
Incalcuable goodwill – priceless
With such humongous purchasing power at its disposal, Apple dictates every aspect of component supply chain management, attaining the latest and highest quality parts at the absolute rock-bottom prices. Apple can literally make or break pretty much any suppliers with its purchasing decision. Imagine the terror those suppliers feel at the mere possibility of losing their Apple contract. No wonder when Apple says bend over, suppliers ask how far.
The end result is absolute nightmare for Apple competitors. They have to fight among themselves for obsolete, substandard parts at top dollars to build their junk knockoffs. Apple competition? What competition?
The Western World will suffer for a while till we figure out what business we want to be in. I think we need to be in the “creating” world, not the “assembling” world. to this end; it is absolutely critical we spend our money on “intellectual infrastructure”. The better educated our population, the better we will be able to survive the next phase.
The horse is out of the barn, folks. Shutting the door with protectionist policies simply puts you in a fools paradise and that just turns the slide into a fall with no way to recover.
Creation in the absence of craft is precarious, in my opinion. I believe that one of the major reasons that the U.S. economy is heading into greater difficulty down the road is that we have lost balance. A formerly strong middle class has dwindled because manufacturing has moved offshore, resulting in a more polarized rich/poor socioeconomic situation. More and more jobs are “service” jobs which typically pay very low wages. A large number of jobs are in banking, investment, and insurance – making money from money. And the health care industry is also growing as the sedentary desk jobs take their toll. Meanwhile, a decreasing number of people are farming, building, mining, manufacturing, assembling, repairing, etc.
a few years back when Apple moved to the Unibody design for their laptops, I thought this might be the beginning of Apple bringing some of their manufacturing back to the United States. That process does not require as much labor so it would make sense. We are never going to get back this high tech component work to the United States. We lost that war more than a decade ago.
Woao! these should have known sooner when things are becoming necessary.