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

[samcraig]

It most certainly is not, but you might want to check yourself and your previous comment before you go projecting that.

I think that you're taking that comment too seriously - which was CLEARLY tongue in cheek.

Do you really think I think you believe that Apple doesn't strive for excellence?

I was poking fun of your semantics. Relax.

 

[sigamy]

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.

I disagree. You seem to be arguing both sides of the point. Plus, you seem to be confusing chip design with the fabrication process.

Why has Apple had to move from one platform to another? Because their chip supplier's failed to deliver what Apple wanted/needed.

Sometimes it was technical reasons, but mostly it is because each company has it's own priorities and those may not be in line with Apple's. You think Apple likes going through architecture shifts? 68000 to PPC, then PPC to Intel, then iOS on ARM. These were not fun side projects, these were all necessairy evils.

Moto wanted out of desktop processors, IBM wanted to build chips for Blade servers and didn't care about low power needs in notebooks, Intel didn't have a mobile-ready play, etc.

Apple has publicly said they believe they should control the key technology in their products. That is why they have purchased PA Semi, Intrinsity, and Anobit. Apple is now fully designing their mobile CPU, based on ARM architecture.

All that is left is the fabrication process. I'm all for Apple building fabs and controling this end-to-end.

Folks said Apple would fail miserably at retail and we all know where that went...It's time for Apple to reinvent manufacturing. The icing on the cake would be if at least some of these manuf jobs could be in the US.

 

[Iconoclysm]

True. But Samsung can take the time and resources using to produce those chips and make others that can be.

You seem to think that if Apple drops their order that Samsung is just going to twiddle their thumbs and lose business vs creating another revenue stream. Yeah. Ok.

What Samsung is going to do is not create any more of these chips than they are going to ship to Apple...and if there are some left over, they will be recycled. The factories will need to be retooled and another purchaser will have to come along but if you think another buyer with the same demand is going to come along you're crazy. This will have an impact in the short term.

 

[EbookReader]

http://www.forbes.com/sites/timworstall/2012/11/12/samsung-raises-prices-to-apple-i-wonder-why/

Of course, sometimes you increase prices just because you can. Whoever it is wants more of what you can make and cannot get it elsewhere: you’ve got them over a barrel so why not gouge them? Often you can do this but you don’t: you’d prefer to be long term greedy, not short term. For if your desperate customer realises that you’re gouging her then she’ll be looking around for another supplier for the future. Possibly even going so far as to encourage the setting up of a competitor to you.

So, what might encourage Samsung to go for the short term greed rather than the long term type? My suspicion is that Samsung is realising that there’s no long term relationship available with Apple any more. There is of course the multi-continental fight going on over Android and the design of phones and tablets. But more than that, Apple has been disengaging from Samsung as a flash memory supplier, even as a screens supplier. To the point that there are rumours that Apple has been bailing out a Sharp plant in order to ensure that supply from some, any other than Samsung, company.

There have also been stories around that Apple is looking to either bring inhouse the chip fabrication itself, or to look for another fab house to bake them. Apple already does the detailed design of the chips with ARM providing the basics of the core. In the medium term, over the next generation or two of chips, it wouldn’t be all that difficult for Apple to farm it out to someone else, the physical construction of the chips.

Which is where my supposition about Samsung comes in. They’ve realised this is the direction Apple is going in. They’re going to get dumped as a chip supplier sooner or later. So, why not make the most out of Apple while they’ve still got the contract, while Apple cannot in fact go elsewhere? Be short term greedy because they know there’s no long term future in the relationship?

 

[TheHateMachine]

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.

People do not seem to realize this at all.

 

[Iconoclysm]

I think that you're taking that comment too seriously - which was CLEARLY tongue in cheek.

Do you really think I think you believe that Apple doesn't strive for excellence?

I was poking fun of your semantics. Relax.

In the midst of some of these other posters, including the one accusing me of spreading FUD by mentioning the word average with Samsung, nothing can be taken lightly without some sort of explanation.

 

[noiseordinance]

Gotta love all the Apple fanbois saying that Samsung is biting the hand that feeds them. If anything, they are biting back and I don't blame them. Apple needs to stop chasing people over patents and get back to making a quality product. I have a $2000+ 15" rMBP that can't surf the internet for crap because Apple can't even get a browser right, let alone UI lag and image retention on many units (of which only SAMSUNG displays aren't affected). Their priorities have been all jacked up and I'd be happy if all of their vendors slapped them around if it meant putting them in their place.

 

[Oletros]

Without Apple, Samsung should be still selling 10 phones each month and RIM being the King.

Those thing can't be said with a straight face

 

[g0odfr1end102]

These big companies are so petty.

I wish they'd focus more on innovation and bringing out cool new tech rather than trying to screw each other over...

AMEN to that!

 

[thekev]

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.

There was another rumor regarding TSMC on here a while back suggesting they had declined a particular offer from Apple. I find it silly just how much some of these guys read into something which remains a rumor. They don't have a confirmation on this shift or know the possible reasons behind it. Reading it on here means it must be true and directly tied in its entirety to the litigation. Smaller processes and other things could make fabrication more difficult. This is just more click bait.

 

[Macman45]

Well TSMC's capability will be the key here I think. Once they have the ability to produce the custom CPU's Apple will have leverage over Samsung, although I suspect they would prefer to dump them altogether if demand can be filled elsewhere. It must be a little tough dealing with a company you are constantly at loggerheads with.

 

[dreadnort]

One of the funniest threads i've read.

Samsung did this and apple did that
and if apple does this then samsung does that

If Samsung makes such ***** quality parts why the feck did Apple use them in them in the first place?

Apple has been planning to move their fabraction to TSMC for a while, it take time to build up the resources needed to make the amount of parts they need.

and to the one person who said they should build a factory in the US to make it all then they would turn out like your cars
rusted out **** boxes that have cheap plastic and cant go round corners

 

[Vitrum]

Those thing can't be said with a straight face

The whole post from that guy is quite sad disgusting aswell how someone is so drunk on the kool-aid.

 

[swy05]

Samsung products are such garbage that Apple has been using them and going to them repeatedly for years.

Yeah, makes perfect sense to go with a manufacturer that is such garbage.

I guess Apple was bored and picked a name out of a hat.

Newsflash. No one produces the quality components and is able to keep up with the demand like Samsung. No one.

Apple is cutting off ties with Samsung because Samsung is their biggest competitor and a big threat to them. Samsung is cutting off ties with Apple because they realize Apple is not going to be doing business with them anymore so, might as well milk them for all they have.


Sometimes when I log into this site I feel like I've logged into Xbox Live with how asinine, ridiculous, and blind people are.

 

[daneoni]

Apple just needs to take TSMC out on a flamboyant date.

 

[iSayuSay]

So your saying that just because Samsung provides Apple with components, which Appleays for, it is ok for Samsung to rip off their products?

That is a load of ********. If I went to a components maker, order parts and paid for them, that gives the supplier a right to just rip of my products?

So it's okay for Apple to rip customers off with their products price tag and ridiculously expensive accesories/upgrades, but it's not cool for Samsung to rip Apple off? Fanboy much?

I'm with Samsung on this one. Get the $$ off Apple so they know how it feels to be treated as "premium"

 

[Vitrum]

So it's okay for Apple to rip customers off with their products and ridiculously expensive accesories/upgrades, but it's not cool for Samsung to rip Apple off? Fanboy much?

I'm with Samsung on this one. Get the $$ off Apple so they know how it feels to be treated "premium"

Its the kool-aid my friend starting to get out of hand

 

[iapplelove]

Apple vs Samsung actually bores me now

 

[the8thark]

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

I don't. My point is if Samsung keep raising their prices, they will push Apple to a point where they will only stay cause no one else can give Apple reasonable production amounts and prices. When the others can Apple will be gone.

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?

You assume samsung would be fine without Apple. Apple are lots of revenue for samsung. Sure their departments that don't deal with Apple would be fine.

Hasten their move? Isn't it more about others not being ready for Apple, than Apple not being ready for them? It takes quite some resources to take on Apple.

Correct. But my point is Apple can't move cause there is no one else who can take Apple on. But Apple will move from being happy with samsung to only using samsung cause no others exist to replace samsung for Apple.

 

[KanosWRX]

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%.

 

[the8thark]

So it's okay for Apple to rip customers off with their products price tag and ridiculously expensive accesories/upgrades, but it's not cool for Samsung to rip Apple off? Fanboy much?

I'm with Samsung on this one. Get the $$ off Apple so they know how it feels to be treated as "premium"

At least Apple sell and demand premium products. Other manufacturers try to sell you crap for the premium price.

 

[fxtech]

I have a $2000+ 15" rMBP that can't surf the internet for crap because Apple can't even get a browser right, let alone UI lag and image retention on many units.

You must be using it wrong.

 

[KPOM]

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?

Apple is unlikely to take manufacturing back in house. They focus on design, not manufacturing, which is a relatively commoditized business.

It's highly doubtful that Samsung is raising prices to "stick it" to Apple. That is foolish from a business perspective as it a) would prompt Apple to leave as soon as it can, and b) could scare aware new customers worried about their pricing leverage. The less conspiratorial explanation is that Samsung is investing a lot of money in their Texas plant and wants Apple to cover more of the cost since most of the output of that plant is for Apple.

In the meantime, it's estimated that Apple is getting about $7 per phone from HTC. If that becomes the basis for a global settlement between Apple and Samsung, it could be quite beneficial to Apple.

That said, you are correct that over the years, they did become dependent upon Samsung, which they are trying to change. That's probably why they reportedly are propping up Sharp. Pretty much all the Japanese electronic companies are in trouble, so they are ripe for "rescuing" from Apple if it makes strategic sense.

 

[unplugme71]

For those who don't understand business, it works like this:

Cost of manufacturing increases every year. Let's say each chip increases $0.25 per year.

Instead of pissing off your customer every year by increasing prices, you do what's called a multi-year average, or contract term average.

So if the initial cost of making the chip costs $2.50, and you have a 5 year contract, you charge $3.50 per chip. This protects the company from price increases over the length of the contract and you don't look bad increasing prices every time the market fluctuates. Now if the prices increase $0.75 in one year due to a natural disaster or some sort, then you tell your customer, there will be a price adjustment in the contract for the term of the disaster recovery.

But lets say the price of chips only increased $0.50 in the 5 years instead of the $1.25. You can either offer the same price, or only increase the cost to $3.75.

 

[Oletros]

Apple are lots of revenue for samsung.

No, it isn't, it is something like a 10% of the chip division revenues