Apple and Samsung can still make money together and they will

August 28, 2012
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    Some of the best relationships are fiery and combative, but passionate arguments can also lead to irreconcilable rifts. Now that Apple has beaten Samsung in a U.S. court the company still needs its South Korean partner to produce lots of components for the iPhone and iPad. In light of Apple’s and Samsung’s patent war, and Apple’s claims about Samsung copying everything it does, you’d be forgiven for thinking that a working relationship might become untenable.

    As we know, Apple and Samsung have been business partners for a long time. According to a Reuters article,

    “As well as being the only supplier of micro processors for the iPhone and iPad, Samsung also supplies DRAM and NAND-type memory chips and flat screens used in the popular Apple gadgets. Samsung products comprise 26 percent of the component cost of the iPhone, Samsung’s lead counsel Charles Verhoeven was quoted as saying in the media.”

    Sales of those components will dwarf the $1.05 billion that Samsung has been ordered to pay Apple; in fact revenue could be as high as $13 billion and generate a hefty $2.2 billion profit for Samsung, according to Morgan Stanley.

    Let bygones be bygones?

    The question is can Apple and Samsung put their differences behind them in the pursuit of profit? Honestly, I suspect there’s nothing Apple and Samsung wouldn’t do in the pursuit of profit. Samsung recently invested $4 billion in its Texas plant. That’s the one that produces the Cortex A5 and A5x chips that you find in iPhones and iPads.

    Samsung has insisted that its handset division remains completely separate from its component supply, and so it should be business as usual. Samsung has always been happy to supply components to its rivals – the company also supplies HTC, Sony, and Nokia. Apple hasn’t said anything to suggest it won’t use Samsung anymore, but then it wouldn’t. If Apple was determined not to use Samsung because of the patent issues it would have made moves already, after all, the dispute is not new.

    There’s no doubt both companies have been looking to other partners to reduce their reliance on each other. Japan’s Elpida Memory Inc has been selling more mobile DRAM chips to Apple and it looks like LG Display might supply the new iPhone 5 touch screens. As for Samsung, the South Korean company has been adding new customers like Qualcomm to its client base. However, when it comes to processors, Samsung is Apple’s supplier. We also know that Apple creates massive demand for new releases and the company will need the capability to ramp up production enormously.

    They may not like each other very much right now, but they’ll grin and bear it for the foreseeable future and all that money flowing in is sure to soften the blow.

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