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

Remel said:
Would you like a 7-8% pay cut?
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You really think Samsung can't sell the extra capacity to someone else ? If Apple leaves, some other customer will come along.

It's not like there's a dearth of demand for microprocessors in the mobile and electronics industry.
 
ThatsMeRight said:
It's a low move from Samsung to demand higher prices when you know your customer can't go anywhere else and absolutely needs your product.
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Supply and demand.

Apple does it every time they massively overcharge a customer for extra memory on any iOS device, knowing they can't get the extra memory for their device from anywhere else.

As for low moves with chip prices, recall 2009 when supposedly Apple manipulated the Asian memory market by asking for more chips than they actually bought, then buying the resulting oversupply at a discount.

If it's okay for Apple to charge what the market will bear, then what's good for the goose... etc.
 
KnightWRX said:
Again, sorry but no. The question "Chocolate, Vanilla or Strawberry ?" doesn't become a bunch of YES/NO questions subconsciously for humans like it does for computers.

Otherwise, Neapolitan wouldn't exist.
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Ok - you've clearly decided "no" to whatever I'm going to say, regardless of the actual content, so no harm no foul.

Is it time for me to go home from work? That would be an emphatic, hell yes!
 
Mr.damien said:
Yeah, Apple is so stupid to make stuff by themselves. Their custom proc Apple A6 is so weak and less powerful than the competition just paying "by contract".

Ho wait ...
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Ho wait... Apple doesn't make the A6. It designed it. Samsung made it. In a Samsung factory. With machines and expertise Samsung owns. Big difference between designing it and making it.

And if Apple could make it, they wouldn't have to take a 20% hike from Samsung.
 
i.mac said:
Ok. Let us see how you do it in Korea:

1. Americans guard your borders
2. Americans design the products that your companies "innovate" (looking at you samedung).
3. Americans buy your products
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Since it seems like you're rewriting history and your conveniently forgetting reality...

4. The US forces itself into Korea's civil war. Hundreds of thousands of Koreans die.
5. The US gets their arse handed to them by China. After 3 years of fighting, the US had lost ground.
6. The US places hundreds of thousands of landmines in Korea, likely to kill and maim Koreans for decades to come.
 
Dwalls90 said:
Almost 10% is a big decrease in revenue to swallow. Shareholders will love that.
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Revenue is top of the line. What is the margin on Sales to Apple I wonder. I'd bet my balls it's not proportional to revenue, maybe 3-5% of their operating income? The two used to have good relations and I'm sure Apple got preferential pricing due to the size of their orders and for ongoing goodwill.

Since we all know the relationship has gone downhill and is pretty much irreparable at this point, might as well get some income as revenue means nothing. I'd rather have 40% margin on $100m than have $500m in revenue with a 5% margin.


And to the armchair CEOs who say that Apple should manufacture their own SOC, there is a good reason why you are an armchair CEO. Manufacturing is not a core competency of Apple, they have almost zero expertise in it. A fab plant costs billions. Just Samsung's Austin plant is about a $14 billion capital expenditure. Do you think it would make financial sense for them to make their own chips? That is $14 billion in fixed costs they would have to make up before they even made a profit.

How many purchased SOC would that translate to? The constant retooling and expertise costs would be enormous. Also, they have no experience with fabs. Do you think Samsung hasn't developed some best practices and industry know how with their experience in chip manufacturing or do you think Apple will be able to through some money at a fab plant and be competitive.

Even if Apple had 50% of the market share and not 25%, it still wouldn't make fiscal sense. They simply don't have the volume to be profitable in manufacturing. The only reason Samsung can do it because they have a history of it. They started out making stuff for other OEMs and moved to making their own products. They already have developed their reputation as a vendor. They can spread the cost of the fab plants over many different products and through many different vendors.

They wouldn't be fabbing if they only used their product for their own products, it is not economical. Does Apple have the know-how, the relationships, or anything else to make this possible? Do you really see Apple trying to sell their A7 chips to Samsung, HTC, RIM, or Asus?

Be realistic.
 
pacalis said:
Ho wait... Apple doesn't make the A6. It designed it. Samsung made it. In a Samsung factory. With machines and expertise Samsung owns. Big difference between designing it and making it.

And if Apple could make it, they wouldn't have to take a 20% hike from Samsung.
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The largest intellectual property is in the design...chip fab is pretty straight forward. ARM themselves only design chips. Chip manufacturing is a nasty business with incredibly toxic materials and processes. Also, Samsung doesn't design the machines that make chips either...there is an entire industry of companies that you never hear about that does that.
 
SlCKB0Y said:
Since it seems like you're rewriting history and your conveniently forgetting reality...

4. The US forces itself into Korea's civil war. Hundreds of thousands of Koreans die.
5. The US gets their arse handed to them by China. After 3 years of fighting, the US had lost ground.
6. The US places hundreds of thousands of landmines in Korea, likely to kill and maim Koreans for decades to come.
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Speaking of revisionist history...

I can't comment on 6, but 4 and 5 are flat out wrong.

The US did force itself into the Korean civil war, yeah. But so did the Soviet Union and China. It was an incredibly complicated situation with many players involved. You can't single the US out on aggression alone.

5 is blatantly wrong. North Korea controlled 90% of the pennisula at one point, until the US and UN coalition involved itself as a counterbalance to Soviet influence. It ended up a stalemate at the 38th parallel.

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marksman said:
120 billion in the bank, I suspect it will go well as Apple migrates off of Samsung and Samsung loses their biggest customer.
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That's in spite of the olol thermonuclear war, not directly because of it.
 
greatfx said:
Even if Apple had 50% of the market share and not 25%, it still wouldn't make fiscal sense. They simply don't have the volume to be profitable in manufacturing. The only reason Samsung can do it because they have a history of it. They started out making stuff for other OEMs and moved to making their own products. They already have developed their reputation as a vendor. They can spread the cost of the fab plants over many different products and through many different vendors.
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Given that semiconductors keep moving to smaller processes, these fabrication costs would continue to worsen. Many of the weird assumptions are based on the idea that Samsung couldn't even sell a portion of that unused capacity. It's an extremely silly assumption given their reputation. Also I don't know why, but using using the word "armchair" as a prefix makes anything sound funny😀.
 
Jimmdean said:
Samsung is just another supplier in this relationship.

All Apple really cares about here is yield - price is really an afterthought.

Apple owns the design(s) in their entirety - they'll make a business decision to move to someone else for a particular part if/when yield is acceptable - not necessarily price.
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No, they really care about guaranteed volume at a specified price. Yield is the supplier's problem. (I used to run a line that made wafers...)
 
Hellhammer said:
Price isn't the only aspect here. TSMC might not have the resources to fabricate enough chips for Apple, it's used by at least a dozen of other companies, some of which are big names (e.g. NVIDIA, Marvell, Qualcomm). TSMC is already having yield problems with every new process node and taking a huge brand like Apple on board would just make things even more difficult since Apple needs a lot of chips.
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Blah blah blah yield problems.

Here's the thing about Nvidia/TSMC "yield problems." They're low yield because they're supposed to be low. At 28nm, they're ALL low. 28nm is hard for pretty much everybody except Intel, and the only reason we exclude Intel is because they haven't said anything about their yield at all.

TSMC's building more fabs to meet demand because they have the lion's share of customers. So I doubt it'd be a problem. Heck, even the Android cheersquad favorite Samsung had to convert lines away from NAND to meet customer demand for 28nm.

http://semimd.com/blog/2012/05/29/the-28nm-foundry-crunch/
http://www.guru3d.com/news_story/amd_and_nvidia_unlikely_to_switch_to_samsung_for_28nm.html
http://www.semiwiki.com/forum/content/1184-truth-tsmc-28nm-yield.html

If Apple goes to TSMC, it'll be fine.
 
hchung said:
Blah blah blah yield problems.

Here's the thing about Nvidia/TSMC "yield problems." They're low yield because they're supposed to be low. At 28nm, they're ALL low. 28nm is hard for pretty much everybody except Intel, and the only reason we exclude Intel is because they haven't said anything about their yield at all.
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I assume that some others here realize that 22 nM means a line width (or is it metallurgical junction?) of only 220 atoms? It's almost incredible that this stuff works at all (even at 28nM), let alone at decent yields.
 
I foresee Apple finding a new producer, then.

Stay classy, Samsung (yes I know Apple hasn't exactly been "classy" in all this garbage but seriously?)
 
RedCroissant said:
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."
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Apple uses TI in the Lightning connector and their battery packs.

But there's no way Apple will switch to using OMAP considering TI's trying to exit that market. Remember the rumors of Amazon buying a piece of TI? That'd be this part.
 
tbrinkma said:
You understand that, but still don't get that a company's market can grow while their market share shrinks? If the market grows fast enough, a company can *triple* it's sales and still lose market share. The market for it's product has grown immensely, but their share of the overall market has shrunk. This is basic math and economics. Apple's market has continued to grow in the mobile space. Their market share has shrunk to the point where they're just about even with their nearest competitor (Samsung).

The fact that someone wants to keep *adding* "share" where I wasn't using it doesn't mean that my statement was incorrect. Especially when I was explicit about *not* meaning "market share" from the beginning.

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Yep. It's 'redundant' because I was responding to a post made in response to a post I made, Mr. Only-one-person-can-ever-respond-to-a-single-post. 🙄
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Its not the company's market that grows, its the company's products' markets that grows. There's a smartphone market, and a tablet market, and many other markets. And yes, people understand that markets can grow, while at the same time a company's market share shrinks. But because the market belongs to all companies, its the market shares that matter. And Apple's smartphone market share is shrinking.
 
Windlasher said:
What do you mean why?. Why not? For the same reason Samsung did it. Money. They are already a supplier of chips and have the manufacturing capability.

Only it would be better for apple because AMD and Intel are not competitors with apple. AMD and Intel are suppliers the same way intel provides the chips in the macs. They could supply the chips for IOS only using apples design.

This would be an incredibly easy way for Apple to kick Samsung to the curb relatively quickly.
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I think what walie is trying to say is AMD can't supply mobile processor chips to Apple because AMD doesn't manufacture chips.
 
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