Samsung value drops $10 billion over fears of being cut out of Apple supply chain

“Concern that Samsung could lose orders for dynamic random access memory from Apple caused the company’s stock to drop 6 percent on Wednesday,” Katie Marsal reports for AppleInsider.

“Rumors from DigiTimes, the Taiwanese technology publication, suggested that Apple has placed huge orders with Elpida, a chipmaker in Japan,” Marsal reports. “That caused concern that Apple was moving its DRAM business away from Samsung, and Samsung’s market value fell by $10 billion, according to Reuters.”

Marsal reports, “Samsung’s stock troubles on Wednesday also came as a pair of reports from The Wall Street Journal and Reuters said that Apple had tapped a trio of suppliers to supply larger 4-inch screens for its sixth-generation iPhone. Noticeably absent among those three companies was Samsung, which is one of Apple’s chief suppliers of LCD displays.”

Read more in the full article here.

MacDailyNews Take: If true, it’s about time. As we wrote on April 26th:

Here’s hoping Apple CEO Tim Cook plans to kick some Samsung ass someday, for a change, and is working very hard to alleviate, not maintain, or Jobs forbid, increase, Apple’s dependence on Samsung going forward. If not, perhaps Tim Cook, not to mention Apple shareholders, should “wake up.”

Here’s a question for Apple Inc. shareholders to ask their employee, Mr. Cook (tcook@apple.com): “On which planet do companies get paid billions to stamp out parts for competitors’ products and then, once they’re assembled, turn around and repeatedly piss all over them while churning out an unending stream of knockoffs of the very products that they publicly denigrate?”

(Obviously, and unfortunately, Mr. Cook thinks that planet is named “Earth.”)

Here’s a shorter question for Apple Inc. shareholders to ask their employee, Mr. Cook: “WTF are you doing any business at all with Samsung?”

Did Mr. Cook, operations genius, really get Apple so dependent on one company that Apple cannot live without them?

Samsung has been ripping off Apple for nearly half a decade now. How long, exactly, does it take to stop doing business with them?

Apple’s products came first, then Samsung’s:

Samsung Galaxy and Galaxy Tab Trade Dress Infringement

51 Comments

    1. They are probably not wrong this time, but that report is not news, because Apple always did “gigantic purchases” of Elpida’s RAM. Samsung was never sole supplier of RAM, not even majority supplier. The same is for flash memory and screens. The only exclusive Samsung has now is SoC production.

      So there is no point in selling Samsung’s stocks because of this rumour even if it is accurate.

    1. Because MDN in it’s stupidity thinks that you can snap your fingers and build the parts that you need. Factories with this capacity exist in one or two places on earth. I am certain that Aple is working full time to zap Samsung in the balls ASAP.

      1. OMG, there is an adult in the room! There clearly aren’t any involved with MDN. If there were, they would understand that this is VERY big business and it takes time and considerable effort to do what MDN apparently thinks can be done overnight. I, for one, as an Apple product user and stockholder, appreciate Tim Cook’s deliberate approach to this – I don’t want the success of the company compromised by infantile fits of pique (and, by the way, neither did Steve Jobs). And like the gunslinger in “Unforgiven” I have every confidence that when the time comes, Cook will hit his target.

        1. I have to echo Fred from below: Which part of “Samsung has been ripping off Apple for nearly half a decade now” didn’t you understand?

          If you can’t get something done in five years, you’re incompetent.

          Samsung isn’t the only DRAM maker in the world and Apple can certainly afford to pay more from other suppliers to make a strong point. How much do you think they’re blowing on court cases that seem to accomplish nothing? The money wasted in inept lawyers and a broken “legal system” would have been better spent decisively cutting Samsung off at the knees by ceasing to do business with them in every possible area.

          1. And my retort is the same to you: Tell me how you are SO MUCH SMARTER and have SO MUCH MORE INVESTED in this issue than Steve Jobs did, and who was alive and running Apple for four of the last five years. Moron…

            1. Apple had tried with others to handle certain components and such. It had LG producing iPads I believe while having issues with Samsung. So I really don’t think Apple ignored the issues.

              With the retina screens Samsung just wasn’t there fro Apple. Sharp was, and the plans and procedures then were managed by Apple to have Samsung prefect their processes.

              That was my understanding. So, I don’t see Apple ignoring anything. In fact, Appel seems to be bettering the entire playing field – striving for the best from all companies and almost partnering everyone as a huge team. Apple is improving with a gentle push – a win win win situation. And it seems to work well.

              Similar was Adobe… we don’t see Flash a good product for iOS. Show us it works and focus on apps for our platform. It took Adobe a while to re-think and see a profitable directing in iOS platform without Flash.

              Similarly Intel… we want a low power, powerful chip that for mobile computing. Show us what you got and we will talk. It is taking Intel a good while but their Atom chip wasn’t good enough… now a new mobile chip is on the way and they think Apple can not ignore it. That was not the point… the point was at the stage you guys have we have other options better suited to our product. Do this and that and we will talk.

              Apple is the customer here to all these other companies. If they can not produce Apple will find someone who wants their business. If the portions which a supplier is providing are well done and met the numbers Apple needs – processes can be transferable to other plants. Apple has that leverage.

          2. Wrong. Money spent in litigation is not a waste as you would suggest. Instead, it serves a vital purpose in establishing provenance, which can be worth its weight in gold.

            What would you have Apple do in these court matters if they didn’t take them head on? Capitulate? Settle?

            You’d cut off your nose to spite your face?

            1. Do both. Kick them in the nuts by getting your DRAM from Micron, etc. while you litigate in molasses.

              If you haven’t noticed, Samsung has become the world’s largest cellphone-maker – by ripping Apple off.

              A healthy Steve Jobs would have hurt Samsung until they stopped ripping him off. I’m not sure Cook has the killer instinct that’s required here. if this is the beginning of Cook turning the screws, I’m all for it. Much more, please!

          3. You may recall that Android manufacturers have been struggling to buy DRAM and other parts. What will happen when Samsung is dumped by Apple and this newly released capacity hits the market? Androids every where.

      2. +1

        MDN is displaying a knee-jerk reaction with this commentary. It is difficult to switch suppliers when the one you have is a world leader and the others have betted on other types of of technologies, plus their factories are not as advanced as Samsung.

        You could be saying the same thing about Google: why has it taken this long to find an alternative to Google Maps? Because when they are in the incumbent position, you have to wait for them to make a mistake or for their competitors to catch up.

        1. Maps ≠ DRAM.

          Apple could have gotten a new DRAM supplier set up in 5 months (if it even took that long), not five years.

          (Brought to you by Carl’s Jr.)

            1. Micron Technology.

              An American company, no less. That’s not been ripping off Apple for at least half a decade. Imagine that.

              (Brought to you by Carl’s Jr.)

            2. Don’t forget Hynix, Elpida, Toshiba and SanDisk – any of which Apple could have easily bankrolled to create the preeminent DRAM maker and hurt Samsung in the only way the slavish copiers Samsung might seem to notice – in the pocketbook.

              Never underestimate the power of multiple shareholder emails to a CEO. Such missives tend to get noticed.

      3. Which part of “Samsung has been ripping off Apple for nearly half a decade now” didn’t you understand?

        Apple should have stopped buying Samsung DRAM at least 4 years ago. That would have sent a stronger “STOP RIPPING US OFF” message than umpteen endless court cases that likely won’t amount to a hill of beans.

        1. And tell me, Fred, how you are SO MUCH SMARTER and have SO MUCH MORE INVESTED in this issue than Steve Jobs did, and who was alive and running Apple for four of the last five years… please grow up and read the posts immediately before yours and learn something about how global businesses work.

          1. Jobs was busy dying for those four years. In his spare time he created iPad. Cook ran Apple’s operations side for longer than that.

            It’s Cook who got Apple so boxed in with Samsung, not Jobs.

            Jobs was busy getting cut open, having organs replaced, and trying to focus on major decisions, one of which was staying alive long enough to set Apple up for the long term. Cook should have weaned Apple off Samsung’s teat long ago.

            Maybe Jobs blew it in choosing Cook? Maybe Cook is Jobs’s hockey puck mouse or G4 Cube? Did you ever think of that?

            1. First, you obviously haven’t a clue about how Apple works.

              Second, you obviously haven’t a clue how global supply chain procurement and logistics work.

              And just so you know, I returned three days ago from my 4th trip to China, where I was – surprise! – creating a supply change for an American company. So, I actually do this for a living and professionally appreciate the serious challenges associated with it. I also appreciate what Cook has created, which is damn impressive, and clearly had Steve Jobs’ support, too.

            2. I agree. sBeing is not only wrong, he’s on the wrong side of history. sBeing believes Apple is boxed in by Samsung when in fact the opposite is true.

              Not only that but, sBeing believes Apple, Jobs, and Cook learned nothing from past failures and that it was a mistake for Jobs to hire Cook and as sBeing so eloquently put it, jobs was too busy to care.

              Bullshit. Clearly you’re a drama queen.

            3. The central question remains unanswered:

              “On which planet do companies get paid billions to stamp out parts for competitors’ products and then, once they’re assembled, turn around and repeatedly piss all over them while churning out an unending stream of knockoffs of the very products that they publicly denigrate?”

            4. @sBeing: That planet is Earth, apparently.

              Look, it will happen. It may not happen as quickly as we’d like, but I assure you that Apple is not still doing business with Samsung at the level they are because they want to.

              Throwing out other producers’ names without having any idea what level they may currently be at with regards to their production levels is silly.

              Apple can not afford to stop shipping product. They will make the changes as they can while still keeping operations going.

              If this rumor is true, this is one sign that it may be beginning. But, it will be a long process. For anyone to arbitrarily say that this could be completed in 5 months, with no real insight into the inner workings of any of the companies involved is just silly.

            5. doomed if you do and doomed if you don’t
              it’s a bit of a catch 22 — So, Asia owns your boys, huh Ralph.
              Yeah its appreciated what Cook has done. And understood by Jobs support. Even though I don’t totally understand it all – I agree.

              I don’t challenge you. I have no experience whatsoever. But My brother in-law does. He has over 25 years experience with logistic procurements regarding the computer industry. He has travelled over 20 times to and from China and North America dealign with these matters. My brother in-law would agree with you 100%.

              But also, he is my pennys’ worth – an over simplified, but, true view to consider also. And by no means is this an attack on your comments or view point. Just additional splatter.

              Thats what happens when you manufacturing leaves your own country. That’s what happens when outsourcing and things are no longer handled by the same Company directly. It is what happens with trade agreements. It is what happens when partnerships go greedy. It is what occurs when deals run dry. Managing the services of other companies. Managing services. It’s a bit of a catch 22. Apple understands this. It’s partially why Apple chose to design custom chips in-house. Seeing the opportunity they could keep at home. It’s partially why the OS remains so closely tied to the hardware. CONTROL. its important to control as many levels of the items and work as possible. If it were economically possible, Apple would manufacture an design and develop and keep everything to themselves – under the same roof – but its not possible. The best and brightest people will not all chose to work at Apple. And some really great things are made elsewhere. Apple knows that too. Its’ our world of business. The state it is in. And if there were a better way – someone would have begun it and would be doing it by now if so.

        2. @Fred Everyone on MDn appreciates your contributions to these discussions. I just don’t believe that Apple had any choice when it came to the volume or cost that they were demanding. There will be retribution it is just going to take a little longer. Just as Apple is removing Google maps (apparently) revenge is a dish best served cold.

          1. 5 years? That is simply too long. Apple had tens of billions on hand to send a clear message to Samsung years ago. They failed to do so. The responsibility falls at the feet of the COO. That would be Tim Cook.

            As much hurt as Apple can legally inflict on Samsung is how much hurt needs to be inflicted. I’ve seen nothing much for years outside of court cases that never seem to cause much hurt at all.

            1. Apple could use some of that money to build up Samsungs rivals, increase their output and capacity, eliminate some of Samsungs advantage.

      4. Fact is that MDN is read by Apple employees at the highest levels. Maybe MDN’s April 26th take woke somebody up?

        And, if Tim Cook is so great, why is AAPL’s stock plummeting?

        1. How do you know it is a “fact” that anybody at Apple reads MDN? Please cite an authoritative source.

          Further, Apple’s stock price isn’t being depressed by Tim Cook. In fact, since taking over as CEO in August 2011, AAPL is up almost $200 a share. In short, only a moron would be questioning his performance.

  1. It’s really easy to say stop doing business with Samsung. Its a lot harder to do.

    Samsung is a world leader (if not the leader) in display and memory production.

    It will, and has, taken time for Apple to negotiate and equip other providers with the means to supply Apple, on the scale that Samsung does.

    We may see some reduction in Apple’s use of Samsung this year. But the real change, if it comes, will be in 2013.

      1. Transcendent *DING* Factor. It’s all about stock manipulation these days. Actual ‘capitalism’ doesn’t fit into the plans of the desperate and brain damaged. Just laugh at the foolishness. All of us here know what AAPL is actually worth.

  2. Less than among ago WS snookered folks into buying a corporate bond specifically for Samsung USA. Samsung USA has already probably remitted that money to the parent company(payment of something or another). When Samsung USA goes belly-up, the Korean mother ship will have no liability.

  3. oh, DigiTimes managed to lower Samsung’s market value by 10 billion just by a rumor!
    Wonder how much Samsung could fall by facts about Apple leaving them on a grander scale? Just wonder, just….. a little.

  4. Poor, poor, poor Sammy… A minuscule $10 Billion Market cap loss… wwwwwhhhhhhhaaaaaaaaa…… Call me the smallest ambulance ever known to mankind…. So, do you think a $100 PER SHARE DROP in the price of Apple stock is more or less than $10 Billion?

    Sniffle… Sniffle… Sniffle….

  5. Much as I detest Samsung’s way of doing business and would like Apple to drastically reduce their purchases from them, I think that a note of realism is needed.

    Stocks around the world have been tumbling recently, there might be another explanation for fthe drop in Samsung’s stock price and that reason has nothing to do with rumours about Apple.

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