Every iPhone or iPad or iPod touch that you see in the wild, they all have processors inside that were manufactured by Samsung. Samsung, knowing that Apple simply can’t call another company and ask them to make their chips, raised the prices of said chips by 20% according to MarketWatch. There’s not much Apple can do, and the report confirms that, saying Apple accepted the price bump. It also goes on to say that Samsung made roughly 130 million processors for Apple in 2011. This year that number is expected to surpass 200 million. And the contract that Apple and Samsung have, it doesn’t expire until 2014.
So let’s break this news item down. Why did Samsung bump up the prices of their chips? To screw Apple, obviously, but more importantly to make sure that Samsung can keep a greater share of what their factories spit out. The fewer processors Samsung makes for Apple, the more they can make for themselves. What’s Apple going to do? There have been rumors floating around the internet for months that Apple is going to transition to using another fab, TSMC, for their chips. We fully believe the rumor to be true, now it’s just a question of when. The MarketWatch piece says the contract between Apple and Samsung expires in 2014, so there’s a strong chance you’re going to see some Apple devices with TSMC chips inside hit the market within 24 months.
What impact, if any, does this have on the Android ecosystem? Like we said earlier, the fewer components Samsung supplies to Apple, the more they get to keep for themselves. Samsung is now the number one handset maker in terms of volume. They’d like to keep that title, and that means throwing one of their biggest customers under the bus.
Do we feel any sympathy towards Apple? Not in the slightest.