Is Nokia looking to dump Samsung because of a conflict of interests?

February 15, 2013
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nokiameltemi_291146549716The worst kept industry secret is that Apple is slowly but surely ditching Samsung as its component supplier due to the animosity between the two companies. Before Apple took Samsung to court about copying the iPhone, Apple was Samsung’s biggest component customer. Since the argument between the two, Apple has stopped buying batteries and displays from Samsung and is reducing the amount of memory it buys from the Korean electronics giant.

According to a “well connected hardware industry source” who spoke to AppleInsider, Apple isn’t the only one moving away from Samsung. The source says that Nokia, the world’s second largest phone maker, has started to evaluate alternative suppliers for the components it uses in its phones. Nokia sold around 85 million phones in Q4 2012, double that of Apple. But like Apple, Nokia is also in competition with Samsung. For the last quarter of 2012, Samsung sold around 107 million phones. This means that not only is Samsung the world’s largest phone maker, it also supplies the majority of the component needed by the next two biggest phone makers.

And this is where the conflict of interest occurs. Samsung claims that there is an internal firewall between its component business and its phone business. But the worry is that when Apple or Nokia design a new phone they get Samsung to make many of the bits, including many custom designed components, which Samsung gets to see in full when it manufactures them.

What if someone from the phone business pops over to the factory where the components for Apple or Nokia are being made and has a quick look at what is coming off the production line? The “industry source” even goes as far as to accuse Samsung of doing exactly that. Samsung has “a record of getting orders for next-gen components, then canceling the orders. And then they show up in a Samsung phone. When you see a Samsung (certain specialized new design for) OLED phone as you surely will, you are looking at something that was stolen from Nokia,” the source is reported as saying.

If such allegations are true then Nokia and Apple are very wise to move away from Samsung. There is the option of more litigation, but that is slow and expensive. Also trying to prove that a Samsung engineer went to a different Samsung facility to see what was being cooked up by its competition is hard to prove.

What do you think? Does Samsung steal trade secrets from Apple and Nokia, or are they just sore losers because Samsung is selling more phones than they are? Please leave a comment below to let me know what you think.

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