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Samsung Reportedly Hits Apple with 20% Price Increase for iOS Device Chips

R

RedCroissant

Suspended
Aug 13, 2011
2,268
96
What about Texas Instruments?

Wasn't there something in the news recently about Apple using a TI chip in one of its products? Why not use a U.S.-based chip manufacturer that already has a presence in the same state as Apple's secondary hub?

Plus, according to CNET,
Texas Instruments OMAP 4470
"This one currently powers the Archos 101XS and soon the Kindle Fire HD 8.9 and Nook HD line. It sports a PowerVR SGX544 GPU and delivers smooth frame rates, even taxing 3D Android games. Its performance currently outdoes the Tegra 3 in polygon-pushing power."
 
S

SiPat

macrumors regular
Jun 20, 2009
195
0
Price increases are common in most manufacturing industries and are written into supply contracts. Samsung can't just raise prices on a whim -- the contract must have come up for renewal and therefore new prices negotiated.

This report suggests that Samsung is practically blackmailing Apple in to paying a higher price -- Apple isn't that stupid, especially given the escalation of hostilities between the two companies.
 
P

pat park

macrumors 6502a
Nov 29, 2011
716
26
California
Hellhammer said:
That's the lesson Apple needs to learn. Samsung produces everything from LCDs to NAND and SoCs which makes them independent, whereas Apple doesn't own a single factory. Without Samsung, Apple couldn't make a single iPhone or iPad but Samsung would do just fine without Apple, so who is feeding who?
Click to expand...

Samsung will have a huge void in their manufacturing if Apple is no longer a customer. They will feel some belt tightening as well.

Apple may hit some road bumps, but they will be fine.
 
S

samcraig

macrumors P6
Jun 22, 2009
16,779
41,982
USA
KanosWRX said:
LOL, Apple is getting a taste of their own Medicine, biting the hand that feeds you.

Apple - Lets sue Samsung for 1 Billion dollars! Oh wait they make all our chips for the devices we just sued them over.

Samsung - were out 1 Billion Dollars, lets make Apple pay more since they just took 1 Billion from us.

Stupid Apple. They should have worked out an agreement with them, maybe they would have be able to reduce chip prices by 20%.
Click to expand...

Apple didn't sue for 1B. That was the judgment. A judgement, by the way that is in appeals. So Samsung isn't out a dime in regards to the judgement.

I don't think the price increase has anything to do with the court case but because they hadn't raised prices in 5 years and/or because Apple has less purchasing power at Samsung now that they're going to other vendors for other parts.

But - I am sure that Samsung is enjoying the fact that Apple now has to pay for all of Samsung's legal fees in the UK...
 
K

KPOM

macrumors P6
Oct 23, 2010
18,031
7,870
Oletros said:
No, it isn't, it is something like a 10% of the chip division
Click to expand...

That's pretty significant. Plus at one time Apple was Samsung's biggest customer for displays.

Obviously there is a lot more money to be made selling the finished product than the parts. That's why Samsung got serious about its Android lineup.
 
E

everything-i

macrumors 6502a
Jun 20, 2012
827
2
London, UK
The lesson here is to never have to rely on a single supplier for anything. Apple have left themselves vulnerable in having a single supplier for some of their components and that Supplier is now turning the screw. Apple have transitioned their LCD panel to other suppliers so they no longer have a single supplier problem there but I would say they are still a year away from dropping Samsung as a foundry for their processors. This is the reason they developed their own maps so they did not have to rely on Google, a competitor, for that functionality. That was handled badly but they have now removed that point of leverage Google had over them. In an extreme case Samsung could just stop making the processors and that would sink Apple. Now that isn't going to happen because the contractual fallout for Samsung would be huge but it just goes to show how vulnerable Apple has left itself by relying on a single supplier who is also a competitor for supply of a key component.
 
WardC

WardC

macrumors 68030
Oct 17, 2007
2,727
215
Fort Worth, TX
Maybe this will halfway reduce Apple's staggering mark-up prices on their iOS devices and make their already exorbitant prices somewhat more justifiable.

Apple is charging $400 for a device that costs them $150 to make. That is $250 in Apple's pocket for a device that only costs them $150 to make. That is high mark-up if you ask me!

It's even more staggering for their Macs. Their Retina MacBook Pro 15" machines cost them less than $1200 to make, and they are selling them for $2500+
 
V

Vitrum

macrumors regular
Nov 7, 2012
133
0
KPOM said:
That's pretty significant. Plus at one time Apple was Samsung's biggest customer for displays.

Obviously there is a lot more money to be made selling the finished product than the parts. That's why Samsung got serious about its Android lineup.
Click to expand...

Nope, samsung will love if someome buys the mobile devision and just sell the parts :)
 
ArtOfWarfare

ArtOfWarfare

macrumors G3
Nov 26, 2007
9,560
6,059
It's like Samsung is sitting there wondering "How can we piss our partner off more? How can we make them want to jump ship to a rival even quicker?"

It seems someone at Samsung is clueless how to operate in a global economy.
 
V

Vitrum

macrumors regular
Nov 7, 2012
133
0
everything-i said:
The lesson here is to never have to rely on a single supplier for anything. Apple have left themselves vulnerable in having a single supplier for some of their components and that Supplier is now turning the screw. Apple have transitioned their LCD panel to other suppliers so they no longer have a single supplier problem there but I would say they are still a year away from dropping Samsung as a foundry for their processors. This is the reason they developed their own maps so they did not have to rely on Google, a competitor, for that functionality. That was handled badly but they have now removed that point of leverage Google had over them. In an extreme case Samsung could just stop making the processors and that would sink Apple. Now that isn't going to happen because the contractual fallout for Samsung would be huge but it just goes to show how vulnerable Apple has left itself by relying on a single supplier who is also a competitor for supply of a key component.

Samsung is however playing a dangerous game here as other clients may take notice of this and get nervous about relying on Samsung for supply. This could cause Samsung future headaches damaging their brand in the component supply market.
Click to expand...

Theres nothing weird or "dangerous" about it, its perfectly normal for price to increase; contract.
 
S

samcraig

macrumors P6
Jun 22, 2009
16,779
41,982
USA
ArtOfWarfare said:
It's like Samsung is sitting there wondering "How can we piss our partner off more? How can we make them want to jump ship to a rival even quicker?"

It seems someone at Samsung is clueless how to operate in a global economy.
Click to expand...

Sorry - so you're saying that negotiating a better rate for their chips is bad business? Ok.
 
roadbloc

roadbloc

macrumors G3
Aug 24, 2009
8,784
215
UK
charlesdayton said:
This is a bad move for Samsung.
Click to expand...

Probably not. I doubt Samsung even care whether Apple use their services or not. A bonus if they do, but they have plenty of other people needing chips. Including themselves for their own Smartphone line which is giving Apple's iPhone a run for its money.

They'll earn money with or without Apple.
 
N

noiseordinance

macrumors regular
Sep 12, 2012
249
8
ArtOfWarfare said:
It's like Samsung is sitting there wondering "How can we piss our partner off more? How can we make them want to jump ship to a rival even quicker?"

It seems someone at Samsung is clueless how to operate in a global economy.
Click to expand...

Gosh, can't the same be said about Apple? "How can we crap all over our vendors? Oh, let's chase them around for making something with the same shape as the iPad!"
 
itr81

itr81

macrumors regular
Jul 12, 2010
230
52
I wonder if the iPhone 5s will be the first iPhone without using Samsungs foundry? My guess is if not it will probably start to happen next yr. This maybe why Samsung is asking for more because they know they will lose Apple next yr sometime probably? But according Android Authority Samsung has a contract until 2014 with Apple...so who knows.
 
W

Windlasher

macrumors 6502
Jan 11, 2011
483
111
minneapolis
Kick em to the curb....

in 60 - 90 days, Apple will announce that it is building a chip manufacturing plant in Nebraska or somewhere like that or has re-tooled a plant or gotten intel, or AMD to make the chips for them.

I'd bet money the AMD president has a call into Apple at this very moment.
 
V

Vitrum

macrumors regular
Nov 7, 2012
133
0
itr81 said:
I wonder if the iPhone 5s will be the first iPhone without using Samsungs foundry? My guess is if not it will probably start to happen next yr. This maybe why Samsung is asking for more because they know they will lose Apple next yr sometime probably? But according Android Authority Samsung has a contract until 2014 with Apple...so who knows.
Click to expand...

I guess aslong A4 and A5 devices are offered.
 
itr81

itr81

macrumors regular
Jul 12, 2010
230
52
samcraig said:
There's nothing to make back. Samsung hasn't had to pay Apple a dime as of current.
Click to expand...

I bet they are both paying thru the noses for lawyer fees. I bet some of the lawyers are making millions a yr just for representing Samsung or Apple in these cases.
 
S

samcraig

macrumors P6
Jun 22, 2009
16,779
41,982
USA
itr81 said:
I bet they are both paying thru the noses for lawyer fees. I bet some of the lawyers are making millions a yr just for representing Samsung or Apple in these cases.
Click to expand...

Well in the case of the UK ruling - Apple is footing Samsung's bill. I guess trying to be snarky wasn't a "win" for Apple.
 
Popeye206

Popeye206

macrumors 68040
Sep 6, 2007
3,148
836
NE PA USA
WardC said:
Maybe this will halfway reduce Apple's staggering mark-up prices on their iOS devices and make their already exorbitant prices somewhat more justifiable.

Apple is charging $400 for a device that costs them $150 to make. That is $250 in Apple's pocket for a device that only costs them $150 to make. That is high mark-up if you ask me!

It's even more staggering for their Macs. Their Retina MacBook Pro 15" machines cost them less than $1200 to make, and they are selling them for $2500+
Click to expand...

Yaaaawwwwwwnnnnn.... :rolleyes:

I'm soooooo tired of these sorts of comments... if you don't like the product or thinks it's overpriced, don't buy it.

Personally, given the longevity I get out of my overpriced Apple products, they are well worth the money. You get what you pay for.
 
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