Samsung Hits Apple With A 20% Price Hike

[jpeyton]

http://www.marketwatch.com/story/samsung-hits-apple-with-20-price-hike-report-2012-11-11

Samsung Electronics , the world's largest technology firm by revenue, raised the price of mobile processor supplied to Apple Inc. AAPL +0.72% by 20% recently, Chosun Ilbo reported Monday, citing a person familiar with negotiations between the two tech giants.

"Samsung Electronics recently asked Apple for a significant price raise in (the mobile processor known as) application processor," the person was quoted as saying in the report. "Apple first disapproved it, but finding no replacement supplier, it accepted the (increase.)"

The two firms have started to reflect the new supply price recently, the report added, citing the same person.

According to the report, Apple buys all APs used for production of iPhone and iPad from Samsung Electronics with the volume estimated to be 130 million units last year and more than 200 million units this year.

Samsung Electronics has a long-term contract to supply APs to Apple until 2014, the report added.

Samsung Electronics and Apple's South Korea office declined to comment on the report.

The two have been waging war in courtrooms worldwide, and I was beginning to wonder when the client/supplier relationship was going to hit a sour note.

This must be the "Lucy Koh Tax".

 

[Jodell88]

The two have been waging war in courtrooms worldwide, and I was beginning to wonder when the client/supplier relationship was going to hit a sour note.

Exactly, you can't be suing them and have them making major parts for your devices at the same time.

 

[you2]

Naw; it's not a sour relationship; samsung needs the money to cover court costs

 

[WelshBloke]

Naw; it's not a sour relationship; samsung needs the money to cover court costs

Its like Apple customers are paying for both sides in the court cases. :what:

 

[boomhower]

I can see Apple buying a fab before it's all said and done with. They tried once and failed but I can see them looking for another.

 

[ponyo]

Apple plans to switch to TSMC next so why not? Apple is only using Samsung because they have to, not because they want to. Samsung recently spent billions retooling their US plant for Apple.

 

[ray6712]

I can see Apple buying a fab before it's all said and done with. They tried once and failed but I can see them looking for another.

I agree with your statement wholeheartedly and I see Apple making a few changes to its business model in the near future to better compete against its rivals, This news helps Samsung in the short term but in the long term it could hurt them. If Apple moves to a different fab or buys its own thus giving them volume control of one of its most important parts watch out

 

[Dari]

The only reason I see Samsung doing this is if they know they are going to lose Apple as a customer...

 

[WelshBloke]

The only reason I see Samsung doing this is if they know they are going to lose Apple as a customer...

I don't really think either of them wants to do business with the other.

Samsung needs the volume production for its own products and Apple need to work with someone that prioritizes Apples needs.

Buying your own Fab is not a trivial thing though. It can be a money sink if you don't get it right quickly. Also I'm not sure I could handle a round of patent cases wrt Fabbing processes. That really could cause chaos.

 

[Oyeve]

Good. Samsung doesnt need apple as much as it used to. Let apple create their own fab and charge their user base even more.

Or, apple could go back to IBM.

 

[Jodell88]

Apple plans to switch to TSMC next so why not? Apple is only using Samsung because they have to, not because they want to. Samsung recently spent billions retooling their US plant for Apple.

TSMC being a sole supplier for Apple might not be good for other companies that rely on them to produce their own chips.

 

[Topweasel]

TSMC being a sole supplier for Apple might not be good for other companies that rely on them to produce their own chips.

Or Apple themselves. TSMC has practically tripped over themselves on nearly every die shrink so far.

 

[Strk]

TSMC being a sole supplier for Apple might not be good for other companies that rely on them to produce their own chips.

I remember an article about how Apple (and Qualcomm) tried to get VIP access to TSMC and they got turned down. TSMC said they'd make Apple's chips, but no VIP access.

 

[bearxor]

Yeah, TSMC isn't the most reliable.

I don't see Apple buying anything, but I could see them make a significant investment in another company to help them ramp up their production capability. Similar to what they've done with Sharp.

This has been coming for years. Apple is the type of company that likes to be as much in control of their supply line as possible.

 

[preslove]

The issue about components has always been about volume. No one is as capable as Samsung at actually meeting Apple's demand. If Apple switches to someone like TSMC and if that company can't make enough chips then there will be iphone/ipad shortages, which means Apple will lose a lot of money.

 

[JimKiler]

Wasn't their a story about the iPhone5 chip not being from Samsung or it was made by Samsung but the tech was Apple so Apple did not let Samsung see the tech in it. Anyone know what I am talking about?

 

[MrX8503]

The SoC is designed by Apple, but manufactured by Samsung.

 

[WelshBloke]

Wasn't their a story about the iPhone5 chip not being from Samsung or it was made by Samsung but the tech was Apple so Apple did not let Samsung see the tech in it. Anyone know what I am talking about?

Fabbed by Samsung still. Not sure how Apple would stop Samsung knowing what's in it whilst still making it though.

 

[sjwaste]

If Apple wanted to get into the fab business, they should have bought AMD before they spun off the foundry business. I wonder what the asking price on Global Foundries is now?

 

[Kenmitch]

What's a 20% increase equate to? $4-5's? Would think the Apple tax would cover it.

 

[badb0y]

Samsung would only raise prices on their biggest customer if they knew they were about to lose them. Milk it while it lasts.

 

[WelshBloke]

Samsung would only raise prices on their biggest customer if they knew they were about to lose them. Milk it while it lasts.

Plus they know Apple can't get anyone else to do it for them.

 

[ponyo]

Samsung would only raise prices on their biggest customer if they knew they were about to lose them. Milk it while it lasts.

It's no secret Apple is dropping Samsung for TSMC. I don't see what the big deal is on the 20% increase. Apple and others ask for price reduction from their suppliers all the time. And when the yield and supply is tight, it's also normal for the suppliers to raise prices. It's just business as usual mixed with Apple/Samsung drama.

 

[Topweasel]

Wasn't their a story about the iPhone5 chip not being from Samsung or it was made by Samsung but the tech was Apple so Apple did not let Samsung see the tech in it. Anyone know what I am talking about?

Yeah previous chips where designed by Samsung according to the specs of Apple (basically re-branded Samsung chips) but starting with the A4 Apple had been designing their own (pretty much stock cores with the GPU of their choice). The A6 and the hub bub behind that is the fact that for the first time Apple used its architecture license to actually design their own cores that worked with their instruction set.

As for Samsung. The FAB guys and the actual Engineering group is kept separate. When Google said they were placing walls to keep themselves out of Motorola's choices. Samsung actually has to do so. Sure they can get preferential treatment. But the Engineers aren't going to be allowed to look over the Apple designs. Apple will have some oversight rights in production and probably Samsung has several ISO and other Certifications for data and information security to alleviate any worries and of the other companies they are producing chips for.

 

[bearxor]

It's no secret Apple is dropping Samsung for TSMC. I don't see what the big deal is on the 20% increase. Apple and others ask for price reduction from their suppliers all the time. And when the yield and supply is tight, it's also normal for the suppliers to raise prices. It's just business as usual mixed with Apple/Samsung drama.

I'm with you. I don't think there's anything to see here.