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Samsung Display said to terminate its contract as Apple supplier next year

Posted: , posted by Daniel P.

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Samsung Display said to terminate its contract as Apple supplier next year
Samsung and LG have been chief suppliers of screens for Apple's gadgets since the dawn of the mobile revolution five years ago. When troubles arose with the elaborate "Resolutionary" display of the new iPad, Samsung picked up the initial slack from the other manufacturers which were struggling with yields, but later on LG and Sharp caught up.

Samsung is still the largest Apple screen supplier, with the first six month of this year alone shipping 15 million panels to One Infinite Loop. The second half of the year saw a dramatic decrease, though, said the source: "Samsung shipped less than 3 million to Apple during the third quarter of this year and we expect the quarterly shipment in the fourth quarter to fall to some 1.5 million."

Now all this seems to be coming to an end, as one unnamed Samsung Display exec allegedly said his company will be terminating the contract with Apple next year, due to the changed relationship with suppliers Cupertino is imposing - the price per pixel from the iPad 2 to the new iPad has fallen more tahn twenty times for suppliers. Well, that, and one unfortunate lawsuit, too, we'd wager to guess., though here is the official's statement:

We are unable to supply our flat-screens to Apple with huge price discounts. Samsung has already cut our portion of shipments to Apple and next year we will stop shipping displays

Apple is already rumored to search for an alternative to Samsung's processor foundry that supplies the silicon in the iPhones and iPads, and a diversified screen supply chain away from Samsung also seems to be in the cards for next year.

Samsung racks up a huge revenue stream from Apple, supplying it with screens, processors and memory chips, but the profit from these is not much compared to the margins it commands on its own handsets anyway. The Koreans have allegedly said the loss of Apple as an LCD screen customer will be somewhat offset by new orders from the likes of Amazon. Cutting supply relationships won't be the end of the world for both companies, it seems.

source: KT

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posted on 22 Oct 2012, 09:37 49

1. AstronautJones (Posts: 303; Member since: 01 Aug 2012)

Probably the best for both, considering current relationship.
Like being a business partner with an ex-wife, not the best idea.

posted on 22 Oct 2012, 10:27 13

7. alfiehp21 (Posts: 17; Member since: 29 Aug 2012)

You nail it!! Literally

posted on 22 Oct 2012, 11:17 3

15. Nathan_ingx (Posts: 4375; Member since: 07 Mar 2012)

I'm thinking what took Samsung so long to notice that they have been 'tech-handled' the day Apple started the patent wars?
About darned time!!!
Time to see what Apple comes up with.
Observing mode activated!

posted on 22 Oct 2012, 11:40 3

17. PhenomFaz (Posts: 1236; Member since: 26 Sep 2012)

Its best for Sammy as there was too much of bad blood between the two. Now apple has to hunt for suppliers and find one that can deliver the quantity at the price which samsung was offering. I think Apple'll have a tough time as display production is huge for samsng and they could afford to supply Apple with huge orders at minimal margins.

As far as what Apple is going to be coming up with...I am going to go out of my way here and say more sub-par handsets with even worse displays :)

posted on 22 Oct 2012, 12:43 4

21. JeffdaBeat (unregistered)

I didn't think this was much of a news flash...but Apple has been getting their LCDs from LG and Sharp as of recent. While at the top of the year, Samsung was the only producer, Apple soon brought in LG and Sharp. Most of the displays are now made by LG. Samsung LCDs have been reduced dramatically. Apple will be just fine.

Like I said before, this will be a hit to Samsung because Apple was guaranteed business and their number one client. But as you guys said, Samsung and Apple's relationship has been strained probably more than Apple and Google. It's not good to be in the pocket of your competitor.

posted on 22 Oct 2012, 17:57 1

37. networkdood (Posts: 6330; Member since: 31 Mar 2010)

This is not a hit to Samsung, because they will need the supplies for their own products, which are selling very well.

posted on 22 Oct 2012, 19:55

40. Hemlocke (unregistered)

Samsung makes a lot of A6-toting devices equipped with IPS LCDs?

posted on 22 Oct 2012, 21:46

43. VZWuser76 (Posts: 4806; Member since: 04 Mar 2010)

If apple doesn't order more they're not going to keep making them. And since they're only producing what apple ordered, their current stock is already sold. But nice try on the sarcasm.

posted on 22 Oct 2012, 18:40

38. PhenomFaz (Posts: 1236; Member since: 26 Sep 2012)

moreover samsung has other clients that it supplies to with a bigger profit margin...i know apple had the numbers to provide to samsung with minimal profit margin though, this means sammy can now focus all that qulaity time on selling more displays with a higher profit margin to other clients and for some innovation as well.

as far as apple base goes, it was turning out to be more strenuous for sammy rather than profitable

posted on 22 Oct 2012, 12:08 2

19. -box- (Posts: 3991; Member since: 04 Jan 2012)

Hope more companies follow suit. While sales are good, most of these suppliers make their own stuff, and if they do not renew their contracts, apple is stuck, and folks can choose from the suppliers' products instead

posted on 22 Oct 2012, 21:05

41. Nadr1212 (Posts: 741; Member since: 22 Sep 2012)

hah, Phonearena mispelled than in the 3rd paragraph

posted on 22 Oct 2012, 09:48 4

2. MeoCao (unregistered)

Nothing will change dramatically, Apple with their high volume has great power and suppliers do not earn much, in fact few can get much benefits working with Apple.

posted on 22 Oct 2012, 10:01 24

3. Bluesky02 (Posts: 1439; Member since: 05 Dec 2011)

In short "We're getting rid of them as soon as possible"

posted on 22 Oct 2012, 16:53

31. cheetah2k (Posts: 1761; Member since: 16 Jan 2011)

I feel for Apple users now. They can forget about quality hardware in their precious devices..

posted on 22 Oct 2012, 10:01 2

4. PowTheBowl (Posts: 86; Member since: 19 Apr 2012)

Hoping to see Apple make all the parts for their products soon, without the help from Samsung, LG, Sharp, and other companies who make parts for Apple's products.

posted on 22 Oct 2012, 10:19 23

5. Kan_wha (Posts: 88; Member since: 25 Jun 2012)

and watch the price of Apple products double if not triple.

posted on 22 Oct 2012, 10:33 7

9. nofear (Posts: 151; Member since: 22 Jun 2012)

You are 100% correct! but I am 100% is not going to buy it a product over price and outdated stuff any way.

posted on 22 Oct 2012, 10:22 16

6. ajac09 (Posts: 1482; Member since: 30 Sep 2009)

and start to have even more quality issues

posted on 22 Oct 2012, 10:50 8

11. Aeires (unregistered)

When has Apple made all their own parts?

posted on 22 Oct 2012, 12:09 2

20. -box- (Posts: 3991; Member since: 04 Jan 2012)

@Aeires Never that I know of. Always buying off-the-shelf components or having someone else make them. Arugably when Woz and jobs were making them in garages, but those were still off-the-shelf components

posted on 22 Oct 2012, 12:44

22. Aeires (unregistered)

My thoughts as well. To the best of my knowledge, they may design them, but that's as far as it goes.

posted on 22 Oct 2012, 13:23 1

26. JeffdaBeat (unregistered)

That's correct. In a nutshell, Apple designs the product, get components from different suppliers, and puts all the pieces together at Foxxcon. Not unusual. *Roller coaster nerd alert* Arrow Dynamics designed roller coasters, but went to Morgan Manufacturing to manufacture and build the ride. Same goes with cars. Rarely is the design firm the same as the builders.

posted on 22 Oct 2012, 13:56

27. Aeires (unregistered)

Agreed. Cars assembled in the U.S. are becoming the norm, but in reality they are manufactured all over the place. Global economy has changed a lot, it's not just Apple doing things overseas, it's all the big corporations.

*Rollercoaster nerd, lol. I thought the correct term was Rollercoaster offianado. ;-)

posted on 22 Oct 2012, 19:06

39. PapaSmurf (Posts: 10457; Member since: 14 May 2012)

+1 to you.

-Roller coaster nerd/enthusiast

posted on 22 Oct 2012, 16:55

32. cheetah2k (Posts: 1761; Member since: 16 Jan 2011)

Apple has never made their own parts, which is why they're able to make massive profits on their devices.. The moment they start making fab lines, will be the day Apple flushes itself down the toilet

posted on 22 Oct 2012, 10:58 5

13. Topcat488 (Posts: 1396; Member since: 29 Sep 2012)

Then what you're hoping for, is a failed product from Apple... Apple until now has made practically nothing on the iphones, on their own... When they tried look what happens (imaps and such), Apple only takes the credit for what other companies done for them. Give credit where credit is due, but don't say i built this, when others built it for you. Apple is a Chinese product, not built in America...

posted on 22 Oct 2012, 11:02 3

14. xtremesv (Posts: 298; Member since: 21 Oct 2011)

Dream on! In essence Apple is a marketing company with a lot of cash to threaten suppliers. Samsung won't play their game anymore.

posted on 22 Oct 2012, 15:37

30. GoBears (Posts: 454; Member since: 27 Apr 2012)

Yeah right. They don't "make" anything.

posted on 22 Oct 2012, 10:30 4

8. nofear (Posts: 151; Member since: 22 Jun 2012)

I'd expected that Samsung could have done sooner than that. Just the boat without a sail.

posted on 22 Oct 2012, 10:41

10. redmd (Posts: 1397; Member since: 26 Oct 2011)

soon we'll have idevices with display issues. lol

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