“Whatever the jury decides at the end of Apple Inc.’s trial against Samsung Electronics Co., Apple’s deep ties to Samsung are becoming more apparent even as the two companies clash in court,” Ian King and Adam Satariano report for Bloomberg. “As the trial enters its second week, Apple is producing testimony intended to prove that the South Korean company copied patented technology for smartphones and tablet computers… The Cupertino, California-based company seeks $2.5 billion in damages.”
King and Satariano report, “The allegations over intellectual property contrast with the lucrative commercial ties that bind the two companies. Apple’s reliance on Samsung (005930) chips for its best-selling phones and tablets will be worth as much as $7.5 billion to Samsung this year, a 60 percent jump from 2011, Gartner Inc. estimates. Because Apple would struggle to find an alternate supplier for the main processor in its mobile devices, the computer maker can’t quit buying from its competitor anytime soon, whatever the trial’s outcome.”
King and Satariano report, “Apple’s spending has helped arm Samsung with resources to fuel a surging mobile-phone business that’s now the global leader. At a time when there are few other manufacturers able to reliably produce the millions of key chips Apple needs each quarter, switching to an unproven partner could result in parts shortages that might help Samsung grab even more market share. Samsung, meanwhile, would risk losing the business of its biggest customer if Apple were to move elsewhere… Apple accounts for 8.8 percent of Samsung’s revenue, making it the company’s largest customer, according to a Bloomberg supply-chain analysis.”
“There are signs Apple is taking steps away from Samsung. Some of the memory components in the iPhone 4S, which was released last year, come from SK Hynix Inc., said Stuart Robinson, an analyst who studies the smartphone-component industry for Strategy Analytics. New screen technology that will be part of the next version of the iPhone, to be released this year, is being made by LG Display Co., Sharp Corp. and Japan Display KK, according to Sanford Bernstein & Co. research,” King and Satariano report. “‘They are trying to reduce their dependency on Samsung as much as possible,’ Robinson said.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Rainy Day” for the heads up.]
Sansung’s total sales for Q1 of 2012 were a little over $4 billion, so I’m curious about the math that equates a $7.5 billion Apple spend to 9% of Samsung’s revenue.
I guess the old adage “the customer is always right” doesn’t apply in Korea.
Memory and flash memory was always supplied by at least two manufacturers besides Samsung, which was never majority supplier. So no changes here.
New Sharp display plant could be the first thing about “distancing”. But lets see.
The two components that Apple gets from Samsung that are the most vexing to source from alternative suppliers are the ARM chip and the displays. Both of these require massive investments in facilities and tech to produce, so it is taking longer than anybody (but Samsung) would like to begin switching. However, Apple has clearly begun diversifying production of the AX chips away from Samsung, and displays appear to be next. But Apple’s growing quantity/quality requirements are such that initially the new suppliers are simply meeting the new demand, not replacing the old. It will be hard, if not impossible, for Apple to stop sourcing from Samsung in the next 3-5 years.
Shouldn’t the headline to read ever instead of even?
So samsung should just stop supplying apple and take the loss. apple wont be able to bring out another fone for 12 months.