As court drama heats up, Apple remains Samsung's biggest client; companies closely tied on components

As court drama heats up, Apple remains Samsung's biggest client; companies closely tied on components
Apple might be vigorously suing Samsung over copying the iPhone, but at the same time the companies have grown to be weirdly hugely dependent on each other. Apple is Samsung’s biggest client, accounting for 8.8% of Samsung’s revenue, according to Bloomberg. On the other hand, Apple needs a proven supplier like Samsung to meet the huge demand for its devices.

To further put this into context, Apple is estimated to spend $7.5 billion on Samsung chips in 2012, a jump of nearly 60% over last year, according to Gartner.

Apple and Samsung have signed a deal under which Samsung is the sole provider of Apple’s A chips (like the A5 and A5X in the iPhone and iPad). The A series of chips alone might cost Apple $2.1 billion in 2012. And about 20% of the iPhone’s internals come from Samsung, a nice illustration of the interdependence of the two.

In Samsung’s hierarchy of clients, Apple’s 8.8% look hugely important in a fragmented portfolio where the second-biggest client is Hewlett-Packard accounting for only 3.2% of the revenue of the Korean company.

“As much as these companies go head to head, there’s a definite intertwining there that makes it a real ugly divorce if it were to take place,” IHS market researcher Len Jelinek said. “Apple cannot, under any circumstances, be caught in a capacity-crunch situation.”

It’s clear that with so much momentum for both companies, a capacity shortage at Apple would quickly be used by Samsung to grow its share.

Samsung and Apple are the two most profitable companies in the phone market, an industry estimated at $320.4 billion in 2011.

source: Bloomberg



26. osmaankhaan unregistered

tom n jerry ;-)

25. CRICKETownz

Posts: 980; Member since: Oct 24, 2009

the Samsung vs Apple court battles are idiotic at best on both ends of the spectrum. you have two companies who rely on each other for profits suing each other over technicalities.

17. whysoserious

Posts: 318; Member since: Jul 20, 2012


13. AndrewRamirez

Posts: 26; Member since: Apr 24, 2012

Apple is suing Samsung. But at the same time, they're dependent to the company that they're suing. OH, THE IRONY... :|

27. XPERIA-KNIGHT unregistered

And thats the exact thing right there, which shows who is the greedy one! Yea like people are saying there is a contract which is to be upheld, but what happens if apple continues to try and screw over samsung and at the end of that contract samsung refuses to partner with them or help them any longer?

11. Commbubba19

Posts: 18; Member since: Apr 12, 2012

Many of you have very little understanding of corporate law contractual laws as it applies to this situation. Samsung likely signed a supplier contract with Apple at an agreed price point and units shipped quota for the A5 chipset. If they terminate that contract, Apple would have grounds for a separate lawsuit that would likely bring Samsung down. That would also scare away other Samsung business consumers concerned that Samsung would not hold true to signed contracts. Samsungs manufacturing division is completely separate from it's mobile division.

8. jove39

Posts: 2154; Member since: Oct 18, 2011

Heart beating inside Apple's made by Samsung :)

7. MartyK

Posts: 1045; Member since: Apr 11, 2012

"Apple is Samsung’s biggest client, accounting for 8.8% of Samsung’s revenue" So with this saying, if Samsung cancel Apple contracts, they will still have a revenue income of 91.2%-- while apple revenue will fall (had to find another chip manufactures). The damage to Apple would be unbelievable! Stock will fall, customer base will leave because shortage of phones and not to mention the quality of the chip itself!. Window and BB would have a chance to get back in the game. Yea, if I was Samsung I would pull the trigger on this one. :)

9. ph00ny

Posts: 2086; Member since: May 26, 2011

Except they're contractually obligated

12. iamcc

Posts: 1319; Member since: Oct 07, 2011

I was wondering about that. As big as 8.8% is compared to HP with 3.x% I would think it would be advantageous for Samsung to screw Apple over on the chips for the iPhonewhateverit'scalledthistime but if they signed a contract (which would make sense) that would explain why they can't do that.

14. ph00ny

Posts: 2086; Member since: May 26, 2011

It is but rumor has it, they renewed their relationship at steve job's funeral iirc. This is on top of numerous reports showing apple visiting samsung in korea post steve jobs

16. iamcc

Posts: 1319; Member since: Oct 07, 2011

I'm not surprised. When Steve Jobs died Samsung probably realized that Apple could only go downhill from there like most of us did. I would've renewed it too.. not much of a threat from the Apple camp in my opinion. For what it's worth I have watched EVERY single iPhone unveiling since the very first one refreshing the page every second hoping to catch a glimpse of the next feature they would release. That will probably not be the case this year...

23. taco50

Posts: 5506; Member since: Oct 08, 2009

You'll be glued to your screen this year too :)

4. Angkor

Posts: 108; Member since: Jul 05, 2012

Samsung must stop supplying Apple now if the trials are not cancel and no more lawsuits. Samsung don't be an under dog fighter let beat Apple to the ground.

18. thebest

Posts: 231; Member since: Jul 08, 2012

apple and samsung have signed a deal and samsung will have to supply stuff for apple until the end of 2014 at the right prices whether they like it or not, apple has bought two small chip manufacturers in asia samsung should always try their best and make things for apple,then samsung will earn money irrespective of which of the two companies does well in the market, they are already making 3 times more than what apple is asking them in the court.....there was a rumor that apple found another source for its components, just because of that rumor, samsung lost $10 is making a lot of money,they shouldn't act like kids, they should just continue the good work, apple is not the only company that is getting its components made by samsung, even the other companies do that, samsung is a huge chip manufacturer, thats their business

1. ajac09

Posts: 1482; Member since: Sep 30, 2009

Samsung should double the price on all it sells to apple haha

2. doejon

Posts: 411; Member since: Jul 31, 2012


3. XPERIA-KNIGHT unregistered

Apple's strategy.......Buy what we need from them and then sue them for looking like us! double whammy right? Samsung is clearly inspired by apple and not looking to harm apple in any way.... Proven fact that Apple is as greedy as scrooge on christmas day!

5. troutsy

Posts: 385; Member since: Feb 17, 2012

NO. Apple's product line are probably some of the most profitable components for Samsung. So that's one swing-and-miss. And, intentional or accidental, Samsung's "inspiration" from the iPhone caused harm to Apple. You can call it greedy to sue for reparations for the damage GS2 did to the iPhone 4, but Apple is doing the right thing to prevent Samsung from making any more iPhone clones.

6. dragonscourgex

Posts: 307; Member since: Jan 16, 2012

How did it harm Apple? Do you believe that the people would bought a Samsung would have bought a iPhone instead? My first smartphone was a Samsung Captivate, I can honestly tell you, even if the Samsung Captivate was not a option or any other Samsung phone...I would not have bought a iPhone.

22. taco50

Posts: 5506; Member since: Oct 08, 2009

By copying Apple's design the phone appeals to more people. Simple!

10. LostInTheRed

Posts: 85; Member since: May 03, 2012

If you're basing the GS2 did harm by what Apple is claiming, I'm calling a big BS. They look significantly different, size being the biggest difference. If you want to claim that the GS2 did harm because it was a superior product to even the 4S and therefore sold well, I couldn't argue with you.

21. taco50

Posts: 5506; Member since: Oct 08, 2009

You haven't paid attention at all over the last week have you

20. taco50

Posts: 5506; Member since: Oct 08, 2009

Actually Samsung is harming Apple by copying

24. mas11

Posts: 1034; Member since: Mar 30, 2012

That's why Apple keeps raking in record profits. Obviously Samsung isn't cutting into their profit margins if for every dollar the mobile industry makes 77 cents goes to Apple.

15. ph00ny

Posts: 2086; Member since: May 26, 2011

If you think about it, all this litigation show between apple and samsung may just be trying to negotiate for better prices on components

19. taco50

Posts: 5506; Member since: Oct 08, 2009

They can't as they've signed a contract

28. roscuthiii

Posts: 2383; Member since: Jul 18, 2010

Funny thing about contracts... they expire. At which point they are renegotiated and the current positions of power become pretty important. Other than that, there are also walk-away and/or escape clauses included in the verbiage of a lot of these bigger contracts that allow either entity to break the contract without incurring damages. My company is subcontracted with one company under yearly contracts to provide services for a third company. There are clauses that allow either of the three companies to walk away at anytime. KInda makes contracts pointless in the end.

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