Samsung Working to Keep Design Dispute Separate from Component Contracts

MacRumors

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Original poster
Apr 12, 2001
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Yesterday, we pointed to a report from The Korea Times quoting a senior Samsung executive as saying the $1 billion judgment against the firm in its patent and design dispute with Apple was the "worst scenario" for Samsung. Several senior executives were reportedly holding an emergency meeting yesterday to discuss Samsung's next moves in the case.

Reuters now notes that Samsung CEO Kwon Oh-hyun, who took the reins of the company as part of an executive reshuffling in June, was not present at that meeting. According to the report, Kwon's absence was part of Samsung's efforts to compartmentalize the patent and design dispute within the company. While he does serve as CEO, Kwon's primary responsibility is to oversee the company's component business, a division that maintains a close relationship with Apple.
The clear message from Samsung is that a strict internal firewall between its handset business and its components operations remains intact.

While it plans to appeal the U.S. verdict, and a damages bill for $1.05 billion for copying critical features of Apple's popular mobile devices - a sum that could be trebled - Samsung will not want to put at risk its Apple supply contract which is worth billions of dollars.
The report notes that both Samsung and Apple have been seeking to diversify their supply relationships to reduce their reliance on one another, but the two companies remain very close partners on the supply chain side. According to statements by Apple's lawyers during the trial, Samsung parts currently comprise 26% of the component cost of the iPhone, even with Apple taking steps to move contracts for some commodities such as DRAM from Samsung to competitors Elpida and Hynix.

Article Link: Samsung Working to Keep Design Dispute Separate from Component Contracts
 

GoreVidal

macrumors 6502a
Jun 19, 2011
597
0
Well duh, as the supplier to one of the most successful and best selling consumer electronics companies in the world, they'd be stupid to let those contracts go elsewhere.
 

mozumder

macrumors 6502a
Mar 9, 2009
859
2,366
Samsung will probably be a major supplier for a long time.

Even if they find 2 other vendors to supply DRAM, that still means Samsung is going to supply roughly 1/3 of the DRAMs in the handsets.

It's not like there's a million other component vendors. Apple is going to be stuck with Samsung for a long time.
 

b166er

macrumors 68020
Apr 17, 2010
2,062
18
Philly
They still gotta get paid. They wouldn't want to throw away their chip relationship with Apple, or anyone else.
 

charlieegan3

macrumors 68020
Feb 16, 2012
2,395
14
U.K
Well duh, as the supplier to one of the most successful and best selling consumer electronics companies in the world, they'd be stupid to let those contracts go elsewhere.
I think samsung sees themselves as a leading supplier rather than a supplier of a leader.
 

Ryth

macrumors 68000
Apr 21, 2011
1,565
119
Here's their memo

We initially proposed to negotiate with Apple instead of going to court, as they had been one of our most important customers. However, Apple pressed on with a lawsuit, and we have had little choice but to counter-sue, so that we can protect our company.

Certainly, we are very disappointed by the verdict at the US District Court for the Northern District of California (NDCA), and it is regrettable that the verdict has caused concern amongst our employees, as well as our loyal customers.

However, the judge’s final ruling remains, along with a number of other procedures. We will continue to do our utmost until our arguments have been accepted.

The NDCA verdict starkly contrasts decisions made by courts in a number of other countries, such as the United Kingdom, the Netherlands, Germany, and Korea, which have previously ruled that we did not copy Apple’s designs. These courts also recognized our arguments concerning our standards patents.

History has shown there has yet to be a company that has won the hearts and minds of consumers and achieved continuous growth, when its primary means to competition has been the outright abuse of patent law, not the pursuit of innovation.

We trust that the consumers and the market will side with those who prioritize innovation over litigation, and we will prove this beyond doubt.
Im curious on why they put 'Apple was one of their most important customers'...sounds like they don't plan on doing business with them...yet this report says the opposite.

I can't see them risking losing all that business.
 

scottwaugh

macrumors 6502
Jul 22, 2002
359
10
Chicago
If I was Apple, I would be cultivating, growing and eventually moving to other options.

It just doesn't make sense to contribute profits to and work on the nitty gritty details of key components with your main competitor over the long term, JMHO...
 

Mac21ND

macrumors 6502a
Jun 6, 2007
724
167
I wonder if Apple can now just say, "Hey, take those million units out of our credit."
 

chrmjenkins

macrumors 603
Oct 29, 2007
5,322
154
CA
The report notes that both Samsung and Apple have been seeking to diversify their supply relationships to reduce their reliance on one another, but the two companies remain very close partners on the supply chain side.
Samsung doesn't get components from Apple. So how exactly are they diversifying their supply relationship? Telling Apple to take a hike? Raising their prices?
 

Ungibbed

macrumors 6502a
Dec 13, 2010
605
113
USA
This is hardly a surprise as more than just the memory of many products from Apple are Samsung components.
 

realeric

macrumors 65816
Jun 19, 2009
1,046
1,294
United States
Nobody believes that there has been a strict internal firewall between its handset business and its components operations. There was no firewall for blatantly copying between Samsung and Apple. :cool:
 

Eddyisgreat

macrumors 601
Oct 24, 2007
4,851
1
If I was Apple, I would be cultivating, growing and eventually moving to other options.

It just doesn't make sense to contribute profits to and work on the nitty gritty details of key components with your main competitor over the long term, JMHO...
The mobile, chip, tv , healthcare etc divs are all different business units within samsung. The chip div has absolutely no reason nor nothing to gain from copying apple's designs and they are in a very comfortable position right now from apple's purchasing volume. Apple may not like Samsung mobile but their chips work which is why they've been in even the very first iPhone (and a myriad of other iDevices). Apple likewise has the cash to plunk down large orders which samsung would rather fill instead of have the likes of toshiba et al fill their coffers with apple cash.

Ergo if this nonsense continues someone from Samsung Semiconductor (memory unit) will probably walk over to Samsung Mobile and start punching people in the throats for screwing with the cash flow.
 

Joe-Diver

macrumors 6502
Aug 2, 2009
265
0
Samsung to Apple:

"We're sorry, but your parts are now going to cost 10x what they did before. We have to pay a huge court award."
 

mabhatter

macrumors 6502a
Jan 3, 2009
834
194
Well duh, as the supplier to one of the most successful and best selling consumer electronics companies in the world, they'd be stupid to let those contracts go elsewhere.
But not so smart as to make sure the phone division didn't piss off their second biggest customer.... Apple is ready to take all their parts contracts AND the $3 billion! Why should Apple foot the bill for their own award in court? Those contracts are worth around $6 Billion... A year!!! Taking those away will be SERIOUS punishment.
 

subsonix

macrumors 68040
Feb 2, 2008
3,551
79
That's hardly a surprise is it? The component division was not involved in the lawsuit at all.
 

mabhatter

macrumors 6502a
Jan 3, 2009
834
194
Samsung to Apple:

"We're sorry, but your parts are now going to cost 10x what they did before. We have to pay a huge court award."
Apple move $6 billion per year in parts AWAY... That will cost some jobs, and it's not even the parts divisions fault... Ouch!
 

Peace

macrumors Core
Apr 1, 2005
19,514
3,988
Space--The ONLY Frontier
But not so smart as to make sure the phone division didn't piss off their second biggest customer.... Apple is ready to take all their parts contracts AND the $3 billion! Why should Apple foot the bill for their own award in court? Those contracts are worth around $6 Billion... A year!!! Taking those away will be SERIOUS punishment.
Apple isn't going to disrupt their excellent supply chain just to punish samsung.