Samsung's foundry allegedly asked Apple to pay 20% more for each processor it supplies

Samsung's foundry allegedly asked Apple to pay 20% more for each processor it supplies
Samsung recently gave up on building a new chip foundry, allegedly due to Apple seeking alternative suppliers for its processors, like TSMC. While business ties with Apple might be diminishing due to the ongoing legal feud and direct competition between the two, there is one area where Cupertino can't do much as of right now - chip making - and Samsung is taking advantage of the situation while it lasts.

Sources of the Korean newspaper Chosun Ilbo are reporting that Samsung has recently hiked the price for production of Apple's AX line of processors, which are likely made in its Austin, Texas foundry, by 20%. The iPhone 5 teardown pegged its processor price at $17.5, but it's not clear whether that already reflects the price hike, or the price will be about $21 from now on. Either way, not a big deal, apparently, considering the $600+ Apple charges for the iPhone.

Apple was supposedly not very pleased with the idea, but in the end agreed to pay a few bucks more per mobile device for the silicon, which includes the blazing fast chip in the iPad 4. Samsung delivered 130 million processors to Apple last year, and is expected to reach 200 million this one, reflecting Apple's growing sales of phones and tablets. 

The two company have a long term contract, which, however, is due to expire in 2014, and we'd imagine by that time Apple would have switched from Samsung's foundry for the most part. Thus, the Koreans are trying to milk their current monopoly, and compensate somewhat for the diminished screen orders, where its Mobile Display unit was mostly replaced as a supplier by LG, Japan Display Co. and Sharp.

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14 Comments

1. g2a5b0e unregistered

As well they should. Turnabout is fair play as they say.

10. PhenomFaz

Posts: 1236; Member since: Sep 26, 2012

Only 20% more! Huh they should've asked much more from a hog like Apple!

14. anywherehome

Posts: 971; Member since: Dec 13, 2011

The A6 processor goes for $28 so (28*1,2-28)*200000000 pieces this year = 1,1 bln!! = the US verdict great job Samsung!! :-D

2. twens

Posts: 1179; Member since: Feb 25, 2012

Apple should be glad its only 20% more.afterall their products are over priced and will compensate for that 20%.

3. MeoCao unregistered

Great move, SS needs the money to pay for litigation caused by Apple.

5. Hemlocke unregistered

Yes, how dare Apple make the iPhone before Samsung had thought to make a device like it, which is compounded by Apple then forcing Samsung to copy it in totality. The nerve of Cupertino doing all of those things to a tiny Korean company who is innocent and worthy of our compassion.

11. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

Copying "in totality" would mean that Samsung took an iphone, and replaced the apple logos with their own. Do they look similar, yes. Are they identical, no. There are literally thousands of different products that are as similar as the Galaxy S is to the iphone. TVs, washers, dryers, dishwashers, microwaves, refrigerators, dvd players, bluray players, vcrs, desktop PCs, laptops, home stereo equipment, car stereo equipment, personal audio players, cordless phones, etc. But for some reason, the only industries with ongoing lawsuits are the ones Apple is involved in. This attitude of Apple created everything and no one else did is getting old. You've got to admit, most of the stuff that apple has patented, while convenient, is not necessary for the phone to be a phone or to connect to the net. But with those technologies, Apple simply uses them until taken to court over them. Everyone here will bring up that the android oems can't sue over FRAND patents. But they can require payment for using said patents, and Apple tries to use their position to pay a lower price than anyone else does, which would actually violate FRAND. And if they have to take them to court to get it then they should. It's no different than a landlord taking a tenant to court to not paying their rent.

6. cheetah2k

Posts: 2266; Member since: Jan 16, 2011

The only problem is that Samsung needs to sell 47,619,047 AX processors to meet that $1Bn court ruling... :(

8. MeoCao unregistered

The judge is reviewing the case and there is clear evidence of breach of duty by the jury. I guess Apple will end up paying SS legal fees. How about another apology?

4. _Bone_

Posts: 2155; Member since: Oct 29, 2012

Love it! Funny how the bully thinks he can push Samsung around when he depends on that company. In the meantime the bullied kid is quietly turning the world around Apple, and before you know, it's a damn bad place the be a bully! :)

7. Danre

Posts: 85; Member since: Sep 02, 2012

Samsung ask more money. Apple fan have too much money and they don't know how to spend it. May be you can help them.

9. Topcat488

Posts: 1416; Member since: Sep 29, 2012

Apple will simply pass on the 20% cost to their customers, so it won't effect them at all.

12. downphoenix

Posts: 3165; Member since: Jun 19, 2010

Cost of processor goes up 20%, refelcting an icnrease of cost for them about 4-5$. Apple increases cost of their product, like an Ipad, by 20%, cost to consumer goes up 100$. Seems legit.

13. nofear

Posts: 151; Member since: Jun 22, 2012

Yep, iFan will be pay for it because they're brain wash so much and not knowing or knob enough not feeling the pain.

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