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Samsung Raises Chip Prices By 20% – But Only for Apple

Steven Blum
10

Apple and Samsung are like a divorced couple who still own a house together. While they duke it out in courts around the world, Apple still relies on Samsung for the processor chips and LCD displays in their devices. But now Samsung is changing the terms of that contract by raising the price of their chips by 20% – but only for Apple.

 The news comes our way via Korean daily newspaper Chosun Ilbo, which claims it has sources familiar with negotiations between the two firms. According to the same article, Apple apparently wanted to walk away rather than accept the new terms, but could find no replacement supplier from which to purchase chips. Neither companies are officially commenting on the story.

It's hard to read this news as anything but as revenge story. Now, not only is Apple being forced to pay for all of Samsung's legal fees in the UK Galaxy Tab 10.1 court case, and print an apology in UK newspapers, but they're also taking a direct hit to the supply chain. A 20% hike could seriously affect Apple's bottom line in the long run.

Apple has been looking for a way out of the relationship for months now. A report from mid-October indicates that Taiwan-based TSMC has been working on quad-core chips for both iPhones and future Macs. Another Taiwanese firm called Kinsus Interconnect Technology Corporation, is also said to be ready to take over some chip manufacturing duties. Both firms reportedly produce chips that are 10% cheaper than Samsung's.

Samsung's contract with Apple ends in 2014, and I'm sure Apple is counting down the days until they're no longer reliant on their competitor for essentials like processor chips. This uncomfortable – but mutually advantageous – business relationship could be nearing its end.

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Comments

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  • Rutger Nov 12, 2012 Link

    I probably would have done the same thing, but this war now seems childish!

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  • Steven Blum Nov 12, 2012 Link

    In my eyes, these patent wars have always been so childish...now even more so!

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  • Asia Piranha Nov 12, 2012 Link

    apple shall count their bullets well before shooting at others, this is the basic principles of Art @f War. Killing the supplier that supply you your essential component is just merely breaking your own legs. it's extremely dumb to do so.

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  • Dvoraak Nov 12, 2012 Link

    It may be childish but it's also common sense. That relationship is ending in the near future no matter what Samsung does. Might as well cash in while you've still got leverage.

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  • Steven Blum Nov 12, 2012 Link

    That is probably the reason, Dvoraak. Smart comment.

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  • Patrick R. Nov 12, 2012 Link

    Now, the question is, who will apple turn to for it's chips? Very few manufacturers can produce at that scale while maintaining quality. This transition is very critical for Apple.

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  • Aayush Patil Nov 13, 2012 Link

    Since apple can't find a replacement supplier for chips, why didnt sammy hike the price by 60-70%......would have served apple right...!!!!!

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  • CJ Brown Nov 13, 2012 Link

    It is childish, but Apple is getting exactly what they deserve (they started it? now they can go choke on it!) while the real victims remain Consumers! ...


    Sure Apple can find a competing processor chip maker, barter for a lower price (& not pass on the savings to Apple Cult Consumers) - but will said processor chips work as good as Samsung's ?


    I guess Apple can start sucking Panasonic's "you know what" if they want to try and find a competitive LCD display with Samsung's (the only guarantee is - again - any savings Apple gains is not going to be passed down to the Consumer) ...


    C J

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  • Jon Kim Nov 14, 2012 Link

    Get every penny when you can Samsung. They say Apple is most richest company and if you are the only company who can produce the chip. that company suit you for most common shape available why not charge more.

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  • Gareth Whitehouse Dec 10, 2012 Link

    i would have put it up 40% if they can only get the chips from samsung you can pretty much charge them anything.

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