Apple's Court Win Won't Damage Parts Supply Contract With Samsung
With Apple's resounding patent court case win over Samsung last week, there has been speculation that it might damage the parts supply contract between them. Now it turns out that it won't threaten that deal, at least in the short to medium term, since Samsung's parts division is firewalled from its handset division, plus the contract is worth too much money to it. Also, Apple needs Samsung just as much, since Samsung make vital components for the iPhone and iPad, such as the Apple-designed CPUs, memory chips and display panels. In fact, Apple relies on Samsung so much, that Samsung products comprise 26% of the component cost of the iPhone. Despite this tight relationship, it might not stand up so well in future, since both companies are looking to reduce reliance on each other for their businesses.
Morgan Stanley has estimated that component sales to Apple could hit $13 billion next year, bringing in $2.2 billion revenue, which is nearly 8% group operating profit for next year and something which Samsung cannot casually throw away.
Experts and analysts said the symbiotic business relationship between Samsung and Apple is too important for either to put at risk.
"Apple needs Samsung to make the iPhone and iPad. Period. Samsung is the sole supplier of Apple's processing chips and without Samsung, they can't make these products," said James Song, an analyst at KDB Daewoo Securities in Seoul. "Samsung might be considering lots of options to leverage its components business' importance and pressure Apple, and Apple could be also well aware of this."
Posted by | Tue, Aug 28, 2012 - 09:33 AM