“In the past year, Apple executives have expressed concern that their dependence on Samsung limits Apple’s ability to control its destiny by constricting Apple’s negotiating power and ability to use different technologies, according to people who have been told so by Apple executives,” Jessica E. Lessin, Lorraine Luk and Juro Osawa report for The Wall Street Journal. “Apple has cut back on some purchases. It no longer buys iPhone screens from Samsung and has reduced iPad-screen purchases, suppliers say. And Apple has been buying more flash-memory chips—an essential component for storing data—from other makers, say former Apple executives and officials at another chip supplier.”

“But Apple remains critically dependent on Samsung. The microprocessor brains that control iPods, iPhones and iPads are Samsung-built. And some new iPads still use Samsung screens, according to examinations of the devices by industry analysts,” Lessin, Luk and Osawa report. “Apple’s deal this month to start buying chips from TSMC is a milestone. Apple long wanted to build its own processors, and it bought a chip company in 2008 to begin designing the chips itself. But it continued to rely on Samsung to make them. As early as 2010, Apple and TSMC started discussing working together to build the chips, say the TSMC executives. In 2011, TSMC senior executive Chiang Shang-yi met Apple officials to discuss collaborating on the complex process.”

“Samsung has reason to keep the Apple relationship alive. Apple is still Samsung’s biggest customer for components, and a complete retreat by Apple from Samsung would hurt Samsung’s earnings, analysts say,” Lessin, Luk and Osawa report. “Apple’s component orders from Samsung were set to hit around $10 billion last year, says Mark Newman, an analyst at Sanford Bernstein in Hong Kong. That represents a significant chunk of the 67.89 trillion won ($59.13 billion) Samsung posted in sales from its component business, which includes chips and displays. The Apple processor, where Samsung is currently the sole supplier, accounted for $5 billion of purchases in 2012, he estimates. ‘If Samsung loses Apple as a client, it will have an impact because Apple represents a large portion’ of Samsung’s sales of non-memory chips, he says.”

Read more in the full article here.

MacDailyNews Take: Maybe the slavish copier can make up the lost billions in vacuum cleaner sales?


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