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

[Rodimus Prime]

Originally Posted by wordoflife

At some point Apple will just find a new supplier and it'll hurt Samsung more in the end.

Good job.

since Apple has been doing that for a while might as well get all the money they can out of Apple. Apple going thermo nuclear is going to cost them.

[samcraig]

There's no money to be gained back by Samsung - they haven't had to pay (and may never have to pay) Apple 1B.

Seems like business as usual. 5 years without a price increase. And clearly Apple can't move away from Samsung as fast as posters here would like them to. If they could - they would have.

And news today is that Apple is being forced to pay for Samsung's legal fees in the UK...

http://www.engadget.com/2012/11/11/u...ing-orders-fu/

[Muscle Master]

Originally Posted by Hellhammer

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?

This...

Another thing.. Samsung been doing this for years, do you really trust another company to meet and exceed expectations in production of chips

And you think you can't get a iPhone 5 now.. Ha

[1080p]

From What I understand, Apple and Samsung have a contract for chips until 2014. Wouldn't prices be negotiated and set before signing any long term contracts? Calling BS on this article!

[WeegieMac]

Oh great, that means WE foot the bill for the 20% hike via the asking price in future devices.

[notjustjay]

And now we know the real reason behind the rumored sooner-than-expected iPhone 5S.

Edit: wait, I misread the article. TSMC's upcoming 20-nanometer process is scheduled for late 2013. Oh well.

[realeric]

It can't be true.

[paulbennett95]

Originally Posted by WeegieMac

Oh great, that means WE foot the bill for the 20% hike via the asking price in futur pe devices.

The price increase is like $3.50 per chip, so we'll be paying an extra $50 or so.

[Satori]

Originally Posted by WeegieMac

Oh great, that means WE foot the bill for the 20% hike via the asking price in futur pe devices.

We don't know that's what will happen yet (or even whether this report is true!).

[xofruitcake]

Originally Posted by 1080p

From What I understand, Apple and Samsung have a contract for chips until 2014. Wouldn't prices be negotiated and set before signing any long term contracts? Calling BS on this article!

but all these contract has clause in them to adjust price base on market price and cost change..

[zemoleman]

Why doesn't Apple just build its own chip foundry? Perhaps here in the USA (I know, horribly naive)? If Apple is designing its own chips why not build them themselves? Sounds like Samsung has had the best of this relationship-getting paid by Apple for the parts and having access to Apple's secrets/R&D as a result of producing these parts.

[Ries]

Originally Posted by paulbennett95

I can't wait to see what happens to Samsung after apple stops using them for components. A lot less money for Samsung to "innovate" with, hah.

If apple hadn't paid a single dime for any component they have bought from Samsung Electronics in 2011, that Samsung branch would still have had a profit of $4 billion.

[pedromartins]

Originally Posted by Rodimus Prime

since Apple has been doing that for a while might as well get all the money they can out of Apple. Apple going thermo nuclear is going to cost them.

Yes... But since Apple is going to lose a few billions, tell me why they won't:

- Invest 20 billions on LG, resulting in samsungs loses (Apple business and the fact that LG will compete more with Samsung)
-Invest in Sharp (same thing with LG)
-TSMC (same)
-Sony.
-etc.

How many billions per year would samsung lose with all these companies upping their game with Apple paying them for memory, screens, flash, ram, etc? 10?20?50?

Don't forget foxconn.

With this sort of alternatives, Apple would win a lot, Samsung will suffer a lot.
Don't fool yourself, Apple can bring the hammer to samsung not only directly (small part) but also by investing in others. Also, samsung's credibility is down within other clients. What are the other companies thinking? Samsung can bite their hands too...

[gto55]

The present news explains this move from apple

http://cens.com/cens/html/en/news/news_inner_41728.html
"Manufacturing Co. (TSMC) to be the only supplier of 20nm process to Apple quad-core processors over the next one to two years, citing the company’s unmatched technological advance on 20nm process and Apple’s decision to adopt 20nm quad-core processors in its new products. Citigroup Global Markets’ market research fellow, J.T. Hsu, pointed out that Apple began verifying TSMC’s 20nm process in August this year and may begin risk production in November with the process. Volume production is expected to start in the fourth quarter of 2013, raising the possibility that TSMC will hike capital expenditure to US$11-12 billion in 2013 and 2014. "

[andyjam]

I heard Apple have bought Alaska and have started setting up some missiles pointed right at Korea... I can't think why though.

[slughead]

Payback's a bitch!

This probably is a bad move on Samsung's part unless it was actually necessary. Apple might find a competitor able to sell at a lower price.

[Tankmaze]

what happen to this samesung

http://forums.macrumors.com/showthread.php?t=1429815

well... business is business i guess, nothing personal

[starbird]

Originally Posted by Ries

What makes you think, that the others can do it cheaper?

They don't have to be able to do it cheaper. They have to be able to do it for the same.

[H2SO4]

Originally Posted by Muscle Master

This...

Another thing.. Samsung been doing this for years, do you really trust another company to meet and exceed expectations in production of chips

And you think you can't get a iPhone 5 now.. Ha

You two are joking right?
Think how many mobile device manufacturers there are out there. Do all of them use Samsung? Probably not which means there must be other sources of supply.
Samsung make batteries do they? Because I don't think that the Galaxy SIII would work too well without one. Samsung, just like AAPL are NOT independent.
This could be just the impetus a contractor needs to up their game and fill in where Samsung left off.
All companies go through this and the vast majority survive.

[Macboy Pro]

Originally Posted by wordoflife

At some point Apple will just find a new supplier and it'll hurt Samsung more in the end.

Good job.

or, it may hurt Apple with inferior parts. Arrogance and litigation are Apples problem now. It is hurting their ability to innovate.

[Jimmdean]

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.

[Saladinos]

We don't know the motivation behind this - it could be due to things unrelated with the court case; such as a more complex design or more advanced tooling required.

But, of course, it's just extra motivation for Apple to try and find other suppliers. Samsung know Apple can't just switch to someone like TSMC overnight, so they're going to have to take that price increase.

Apple need to sort their supply chain. They're being forced from Samsung, which means any other suppliers will be free to hold them to ransom.

LCDs and CPUs seem the hardest right now. If I were Tim, I'd...

- Buy Sharp and turn it in to a subsidiary. Re-tool, hire new engineers and move forward. Total cost? $5-10 Bn.

- Get people on the boards of Intel and TSMC. Make some strategic investments to keep the close. Intel might be more difficult, but they've indicated some potential willingness to fab non-x86 chips for others. They desperately need a business that grows as the mobile market grows - at the moment, they're shut out of that enormous growth and tied to the failing PC sector.

[samcraig]

Originally Posted by pedromartins

With this sort of alternatives, Apple would win a lot, Samsung will suffer a lot.
Don't fool yourself, Apple can bring the hammer to samsung not only directly (small part) but also by investing in others. Also, samsung's credibility is down within other clients. What are the other companies thinking? Samsung can bite their hands too...

Do you realize how successful Samsung is? Can Apple make a dent - sure - but make Samsung suffer "a lot" - not really.

And please explain how Samsung's credibility is down within other clients. Which clients? How is it down? Is this your opinion, or are there any - you know - actual facts to support it?

I have read more negativity in the press about Apple and what they are doing vs Samsung over the past several months. I still don't think Apple's business is suffering (at the moment).

[slughead]

Originally Posted by zemoleman

Why doesn't Apple just build its own chip foundry? Perhaps here in the USA (I know, horribly naive)? If Apple is designing its own chips why not build them themselves? Sounds like Samsung has had the best of this relationship-getting paid by Apple for the parts and having access to Apple's secrets/R&D as a result of producing these parts.

Distribution of labor and specialization works better than consolidation. Apple might be able to build its own chips, but likely it's better just to leave chip building to the chipbuilders, and when one falls behind, just switch to the next--that's what Apple's been doing with Macs for years. Motorola -> IBM -> Intel -> ?

If Apple built their own chips, they couldn't very well switch to someone doing it better, now could they? What happens if Apple builds its own chips and then Intel releases something twice as fast for half the price? Apple would be stuck with inferior technology and an albatross of a production line. It is naive to think Apple could do it better forever, since it seems no company seems to be able to stay in the lead. It's better then to have the freedom to dump a company that stops creating competitive products.

[barkomatic]

Originally Posted by Sora

The customer won't notice this increase.
Pricing structure is already engrained into Apple's customer base.

They might notice when their iPhones are made out of plastic again to save costs.