Samsung Hits Apple With 20% Price Increase 447
EthanV2 writes "The Wall Street Journal cites a report which quotes a 'person familiar with negotiations between the two tech giants,' apparently confirming this special price hike for Apple. The source said: 'Samsung Electronics recently asked Apple for a significant price raise in (the mobile processor known as) application processor. Apple first disapproved it, but finding no replacement supplier, it accepted the [increase].'"
Re:So???? (Score:5, Informative)
http://www.isuppli.com/Teardowns/News/Pages/Many-iPhone-5-Components-Change-But-Most-Suppliers-Remain-the-Same-Teardown-Reveals.aspx [isuppli.com]
Re:one word (Score:5, Informative)
I believe Samsung has already told Apple they'd be terminating the contract next year or so ... so it's not like they're at risk of losing a contract they've already decided they don't want any more.
Re:one word (Score:5, Informative)
All of Apple's contracts combined (display, processor, memory, etc) only account for about 3% of Samsung's annual revenue and probably less than 1% of their profits (components are typically low margin). While Apple is a big customer, they aren't really a "golden goose" for Samsung.
Re:Inevitable (Score:2, Informative)
Either Apple will start developing the chips themselves or someone else will.
Well that worked out well for Apple Maps didn't it? =)
Actually Apple just joined Intel as the only companies on earth that hand-design their own processors. AMD doesn't even do it anymore. So yes, Apple does design their own chips - Samsung just follows the blueprints in their factories.
Also Apple only designed the interface for the new Maps, which is pretty fantastic. The data behind Apple Maps is supplied by TomTom. Apple did not create their own mapping data set.
Re:one word (Score:5, Informative)
Re:Inevitable (Score:4, Informative)
Samsung Electronics made profits of about $6 billion last quarter on revenues equal to 19% of South Korea's entire GDP. While not quite Apple's $8 billion over the same period, I don't expect to see Samsung execs begging for change anytime soon.
Re:Inevitable (Score:5, Informative)
According to Samsung Electronics, two-thirds of their $6 billion in profits last quarter came from their smartphones.
This is about the same percentage for Apple, the iPhone, and their $8 billion in profits last quarter.
http://www.bloomberg.com/news/2012-10-25/samsung-profit-beats-estimates-on-surging-sales-of-phones.html [bloomberg.com]
Re:Missing information (Score:5, Informative)
More missing info.
Current chip price: $17.50/phone
After increase: $21.00/phone
$3.50 increase per phone adds up to about $87M cost increase per quarter (assuming 25M iphone5/ipad4 per quarter)
That's like half a day of free cash flow from Apple's operations. For the whole quarter.
It's more of a piss Apple off than actually affect their business/profits. Which doesn't seem like a great business move from Samsung, seeing as Apple is their biggest chip customer.
Re:one word (Score:3, Informative)
And if you want to make sure people know which comic you're talking about in the future (i.e. not today or tomorrow), you might want to give the full link to the comic in question:
http://penny-arcade.com/comic/2012/11/12 [penny-arcade.com]
Re:one word (Score:5, Informative)
I believe Samsung has already told Apple they'd be terminating the contract next year or so ... so it's not like they're at risk of losing a contract they've already decided they don't want any more.
The idea that Samsung "told Apple they'd be terminating the contract" is silly.
The contract runs through 2014. All contracts have end dates, and, while a company can attempt to renegotiate (and usually the contract contains language regarding under what circumstances a contract can be renegotiated), they are legally binding for the time period defined in the contract. There's no "we don't like you anymore, so we're ending it early".
For that matter, there's no "we don't like you anymore, so we're going to start charging you more just because" in a contract. Samsung would have to justify the price increase according to terms defined in the contract. Also, given the language of the story, it's likely Apple had an opt-out clause that kicked in under those circumstances - but, being unable to find another supplier, they had to agree to the increase.
Heck, given the vague nature of this story - it's possible this was a NEW contract, and Samsung said "we need to charge you more money for this part if we're going to keep making them for you". But then you have the problem of Samsung signing a new contract with Apple, which goes against the prevailing narrative in this discussion.
Now Samsung could tell Apple they're unwilling to renew an existing contract after its termination date, but that would be a different situation entirely. And, if you claimed that, you'd really need to provide at least a tiny bit of evidence to back up your statement... well, anywhere but Slashdot anyway.
Re:one word (Score:5, Informative)
So far, Tim Cook is making QUITE the splash.
IIRC, Tim Cook was the guy that thought ahead to procure large inventories of flash memory. That kept the cost low and ensured they could meet consumer demand --something Apple has famously struggled with. This patent spat was initiated by Jobs, not Cook (remember Jobs saying he'd use the last cent of the company to sue any other company using 'their' ideas??). Cook has the option to make peace and get back to making computers, not enemies.
Re:one word (Score:3, Informative)
Samsung is number 1 by a very large margin above number 2.
Surely.
Re:Intel? (Score:4, Informative)
Re:one word (Score:4, Informative)
It's well-known that Apple's new A6 leaves other ARM-based chips in the dust.
sorry. the exynos 5 (samsung's A15) wipes the floor with the apple A6.
http://www.androidauthority.com/exynos-5-dual-benchmarks-125134/ [androidauthority.com]