“Samsung Electronics and Apple have been technology’s oddest bedfellows: bitter foes in finished products but indispensible as friends in parts like chips and screens,” Kim Yoo-chul reports for Reuters. “But with Apple moving quickly to reduce its reliance on Samsung’s semiconductor capability amid an intensifying intellectual property dispute between the companies in smartphones and tablets, the relationship is now about to become one-dimensional.”
“According to industry sources, Apple has not collaborated with Samsung in the process to develop its A6 microprocessor used in its latest iPhone 5. Samsung has handled the manufacturing of the processors used in previous iPhones and believed to have contributed in their design to some degree,” Kim reports. “Apple is still relying on the Korean firm to manufacture its chips but has made it clear it will no longer use its rival’s technology, according to a senior Samsung official. ‘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,’ he said on the sidelines of a technology fair at KINTEX in Goyang, Gyeonggi Province.”
Kim reports, “Park Hyun, a senior analyst at Tongyang Securities, believes Samsung’s souring relationship with Apple could have a significant business effect. ‘It appears that Samsung is losing its multibillion dollar partnership as Apple has been its biggest parts client,’ Park said… A report from Barclays claimed TSMC will start producing Apple’s A7 processors from the first quarter of 2014 and stressed hundreds of TSMC researchers and chip developers are currently set to produce processors that are free from Samsung patents… As the patent war deepens, the two companies have seen a faster deterioration of their business partnership. Apple has already reduced its memory chip orders from Samsung for the iPhone 5 as it intends to widen its supply chain.”
Read more in the full article here.
MacDailyNews Take: What was that we wrote last spring? Oh, yeah:
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? – MacDailyNews Take, April 26, 2012
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You want to know what’s really unbelievable? That, after half a decade, at least, of Samsung’s slavish copying, Apple continues to do billions of dollars of business with Samsung. Apple, which has enough money to build or bankroll anything they want, like a chip fab, or a touch screen display factory, or anything they could ever need.
“Oh, you copied our iPhone, our iPod touch, our iOS home screen, our icons, and our Mac mini? Here’s another three endless German lawsuits and, oh yeah, by the way, a $10 billion contract for touch screens.”
Something just does not compute here. If you get mugged, do you buy the leather for a new wallet from your mugger while pressing charges? If you’re Tim Cook, you do.
Apple could have – and should have – dropped Samsung like a bad habit years ago. Not one red cent should be going from Apple to Samsung today. It’s a travesty. It’s poor planning. And it’s bad business. The only conclusion we can draw is that Tim Cook, operations genius, boxed Apple in and is now stuck; beholden to a den of thieves. That sort of “decision making” doesn’t bode well for Apple’s future. It really doesn’t.
Here’s the question Walt Mossberg should have asked Cook onstage at D10: “Excuse me, Tim, but WTF are you still doing any business at all with Samsung?”
Wouldn’t you love to hear the answer to that one? Walt could use Keynote to flash all of Samsung’s knockoffs of Apple’s designs on the big screen behind Tim while he sputtered and stammered.
Next shareholders’ meeting or conference call, somebody might want to ask Mr. Cook that one. – MacDailyNews Take, June 1, 2012
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October 15, 2012: Go, Tim, go!!!
Couldn’t have happened to a more deserving company 🙂
Yes I really hope this hurts Samsung in ways it cannot make up for.
Certainly they will be a lot more paranoid not being able to tell at all what Apple is up to if they are cut loose. Heh, heh.
Re MDN take
Sometimes it takes longer than we would imagine to change major supplier relationships. Tim “gets” that Apple’s job one is to produce the best products possible for it’s customers. Business strategies are second (or third) to that.
Apple will excise the dual parasites samesung and gooogle as quickly as it can, just not at the expense of it’s products.
In addition, Apple likes to make a longtime contract commitment for it’s supplies and manufacturing. It may not be that easy to break the contract prematurely.
My 1 cent
I’m sure Tim gets it – even more so after he got a bunch of emails from AAPL shareholders this past spring demanding to know, “WTF are you still doing any business at all with Samsung?”
Once again, MDN was and is spot on target.
Strongly disageree, Apple has never been about this quarter’s (or next) profits.
They have always been about product, building the best they can
Unfortunately some people don’t get quality. They don’t get that yes, there is a difference in price between Scandesign and Ikea furniture. (because they look (somewhat) alike and serve the same function. However not only does one lasts 5-10 years before it falls apart (and the other lasts a lifetime) but you have to put up with the junk every time you interact with it every day. Fortunately (for we who appreciate it) many people DO realize that meticulous design and manufacturing costs more than “it’s good enough” and that is (more then) enough to keep companies like Apple (and Scandinavian design) in business building the best that they know how to.
But putting shareholders desire for “mo’ money”, above the product? not a chance my friend, that is the genius of Apple
I should have written “shareholders desire for short term money” because , quite obviously, Apple’s focus on the long haul and putting product (& quality) first has paid off handsomely for it’s (long term) investors.
MDN’s take is childish at best. Apple uses Sammy because Sammy affords Apple the opportunity to promote “quality components and build” in their attempt to justify Apple’s much higher retail prices than their competitors.
Apple needs to pause and consider that more often than not, you are best dealing with the devil you know than the devil you do not know. Samsung albeit a bit of a loose canon on some fronts, still builds the best components and chips and they do so by delivering them on time all the time. Not sure that the companies’ that Apple has earmarked to replace Samsung can do the same. OH… no they can’t as already evidenced with the iPhone 5 inventory issues.
In the end, Apple will do what Apple does and Samsung will do what it does and let the chips fall where they may.
Sad state of affairs really and let’s keep our eyes on the amount of refurbs coming out of Apple in the months and years ahead.
I think you analysis is flawed not to mention your pessimistic tone. Apple MUST go running in the opposite direction of Samsung now that Samsung is a competitor and must not be privy to any of Apple’s designs. Not good business sense by any means. Supply issues will certainly be addressed by Tim Cook before proceeding you can be sure.
Apple does not have “higher retail prices” than its competitors in like-for-like products, Kool Aid. Nor does Apple have “inventory issues” with its iPhone 5–quite the contrary, in fact. Also, there’s no evidence that the quality of Samsung components is materially different from that of its competitors.
Why make things up, Kool Aid? About the only thing you got roughly right was referring to Samsung as “a bit of a loose canon [sic],” despite the hilarious understatement.
As I said at the time, moving business of this magnitude and still being able to put out a near perfect product is a colossal business problem. MDN needed to be patient as Apple worked out it’s supplier and quality issues to begin moving in earnest. I am sure Tim Cook doesn’t like spending money on lawyers and is using Apple’s financial and engineering power to direct the company into a competitor only status with Samsung, as it should by the way.
I hope Apple kicks the living crap out of Samsung, as I will not buy Samsung products either. Apple shareholders and fans need to do the same thing they are telling Apple to do.
I’d bet this transition has been in the works for a while. However, Apple’s requirements are so large that it’s taking years to set up alternatives. There aren’t many companies around who could meet Apple’s demands, either in volume or quality control. I don’t recall MDN ever castigating Mr. Jobs for continuing to use Samsung. Give it time.
It’s been tiresome listening to MDN berate Tim, but they’re a convenient Apple news aggregator, and I generally enjoy their snarky takes on the news. That’s something I don’t get at Pulse.
MDN histrionics … get a grip!
It is just due to a lack of understanding of how complex the supply chains actually are for large companies operating at huge volumes. Most tend to think it is as easy as saying – okay, let’s switch part x from vendor a to part y from vendor b – completely ignoring all the logistics that go into such a move while keeping production going at the pace required.
Hey, bottom line: Was MDN wrong? Nope, MDN was right – as they usually are.
Samsung has been stealing from Apple for over 5 years now – Apple should’ve begun to cut Samsung out long before this!
We (AAPL shareholders) ALL agreed that Apple needed to give Samsung their walking papers. We have all been clamoring for it. The difference is that most of us knew it would take time, while MDN was nearly calling for Cook’s head because it seemed they felt he should have been able to do it overnight.
I too, share their frustration with the situation. I just knew that it would take a while.
I’m so glad we have MDN’s and your views on the logistics of running the largest company on the planet.
Apple demands immense volumes and huge quantities. Previously only Samsung could deliver on both, but Apple are taking a much more measured approach. They are helping Samsung’s rivals to become bigger and better so that they can fulfil Apple’s requirements instead.
Apple won’t risk it’s own business for short term reasons, so the switch away from Samsung will take time, but the end result will be a weakening of Samsung and a strengthening of Samsung’s rivals. If Apple simply angrily walked away from Samsung, Apple would not be able to maintain the quality and volume that they have previously delivered and the Apple brand would be weakened. Acting in such a short-sighted way would offer an opportunity for Samsung rather than a threat.
Other companies will be have seen how treacherously Samsung has behaved towards what was once it’s biggest customer. No sensible company will ever trust Samsung again.
“Other companies will be have seen how treacherously Samsung has behaved towards what was once it’s biggest customer. No sensible company will ever trust Samsung again.”
Full ack!
That’s why Samsung tries EVERYTHING possible, to reverse the courts decisions, even murder would be possible, if that would help…
Apple would if Apple could. Apple will when Apple can. We all agree that separating from Samsung is necessary as soon as it’s practical. As someone stated above, even with Samsung Apple can’t meet demand for product. I don’t know that there is a short term solution. But you can bet that Apple is doing everything they can to alleviate this dependency. I’d like to throw out a suggestion but I’m afraid I have none. Tim Cook and company are professionals so I will leave it up to them. Am I happy about this? No. Can I call a huge corporation like Samsung silly ass names? Sure. They’re assholes! But that doesn’t solve the problem. I’m going to guess that Apple has contracts going forward with Samsung and will be with Samsung until those contracts expire. But there has to be an alternative plan that will build all the devices that Apple requires. If it was that easy we wouldn’t be talking about it. Or complaining about it. I’m still pissed that Browett hasn’t been fired. That’s something that Tim Cook could take care of easily. That does not require a long-term plan. But Cook is in charge so we will just have to live with it for a a while. But shareholders need to let their voices be heard. There are a lot of negative things going on lately at Apple that could have been avoided. That’s not helping the stock. It’s underwater again today even with the iPad mini news out there. Dropping fast. Apple needs some good news. The Samsung issue won’t be fixed anytime soon, I’m sure they are working on it.
MDN is not privy to the inner workings of a billion $ company. It is not possible to make immediate changes certainly as quickly as MDN suggests. Tim cook is a genius in this area. I trust Him to make these changes over any other person. Whiny MDN.
Cook is far from perfect. He’s made a number of mistakes. He should have been working to reduce Apple’s reliance on the Samsung thieves long before this.
And you know he wasn’t?
Do you know anything about supply mechanics and how long it takes to develop critical part suppliers?
I am guessing not.
True. And maybe he has been? It certainly should have started before he became CEO. As we all know, this is not something that just started under his watch. It will be a difficult transition at best. Certainly not easily done.
Actually, in that case, Steve Jobs should have done it (or saw that Cook made it happen).
I just isn’t as simple as one would think. Do you not think that knowing Steve’s demeanor, that he wouldn’t have wanted to be completely done with them as soon as possible? Of course he did. But these things are not as simple as changing who you buy your bread from at a restaurant.
Long time ago I remember MDN being lirious about how apple was so smart to lock up the market for 1″ HDDs fom Toshiba, and oh, after that with their long term flash memory contracts…
Nobody could touch apple because they where so smart…well, seems (according to MDNs take) that they are not so smart now eeh?
Really wonder what kids are behind those smug MDN faces…everyone with 2 braincells knows that you never burn bridges behind you when you do business.
Business is about HONORING YOUR CONTRACT
I have been wondering when Apple would be reducing, eliminating odours from Samsung for a long time now. I wonder if Lysol would take care of it?
What an ignorant article.
Apple does not collaborate with Samsung on SoCs already since 2010, since A4 SoC. They only manufacture chips on Apple’s designs.
Not a lot different than the Google map dependency. As soon as Google made Android and he got kicked off the board, Apple needed to drop the Google map. It takes years sometime to correct a betrayal and work around the damage left behind.
Apple continues to gain control of each of the many parts of their products and devices. Like the map app, sooner is better. If Apple would let the users fill in the missing map info for just one week and then review all changes after that, the map data would be completed. Including a street view with GPS map and direction data.
Tim, reach out to the users. We are a huge army of volunteers.
AMEN! Remember early days of the Mac? Apple came to Our Cities for rollouts of 6100,7100, 8100. Rented a venue, invited every local computer teacher and guru and Apple comouter club member, then feed the whole crowd REALLY GOOD FOOD while folks networked, then turned us all loose in our schools, communities, and tech jobs to EVANGELIZE BABY! Hell some of us still have our Apple’s Army clothing. You’re correct. We’re a formatiable untapped resource. Tim could give Guy Kawasaki a call to head up the effort!!!!!
Looks like Amazon.com is in talks to buyTexas Instruments. Not real good for Apple. Apple is a customer.
Mobile chip division.
>>>Samsung is losing its multibillion dollar partnership…..
Sweet!
Yesterday during football i saw too many Samsung anti iPhone 5 tv spots… Will Apple ever come back with something to counteract them or is just outselling them good enough ?
A majority of iHaters actually think Samsung built and invented the iPhone, iPad hardware. LOL I swear!
I think it has been well established that there number of ignorant, incoherent, self-delusional and thoroughly lost people on the planet is beyond comprehension.
The fact that they chatter and cackle all day long does NOT have to ruin it for those of us who strive to become our best selves. Laughter is certainly a great medicine. 😀
Hey Samsung!
You could have done things the humane way with business integrity and positive corporate development. But NOOOOO!
You still could reverse your self-destruction! It’s never too late. It’s just that there are ramifications for self-destructive choices, and they keep accumulating the longer you act as dickheads. The sooner you grow up and get with benefiting yourselves and the rest of humanity, the better! So get going on turning that new leaf right now. It could be a shiny, happy, smiley future!
It sure beats being suitably spanked for what you currently are. Don’t you think? 😀
Samsung helping Apple with chip design? I think not…
This is taking too long. Apple should really use some of that cash, all if they need to get rid of Samsung.
Like Google, Samsung is going to rue the day they crossed Apple!