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Apple could pay 50 billion yen ($483 million USD) by this summer for the stake

Apple sees Samsung in a position of greater control over its supply chain, and seems to be working toward similar goals with a potential majority stake purchase of a Japanese chip venture. 

According to Reuters, Apple is currently in talks to purchase a 55 percent stake in Renesas Electronics Corp's chip division -- called Renesas SP Driver. 

Renesas is a loss-making Japanese chipmaker that is currently in the midst of a restructuring process that will swing focus to its core auto business. Renesas has totaled nearly 650 billion yen ($6.28 billion USD) in net losses over the last eight years.

But Renesas supplies smartphone screen chips for Sharp, Japan Display Inc and LG Display Co Ltd. -- which all happen to make iPhone displays. Hence, Apple's majority stake purchase would mean that it could have greater control over costs, product information, production schedules and specifications. 

This is a main advantage for Apple's top mobile competitor Samsung, which makes its own Galaxy components like screens, chips and capacitors. Perhaps Apple can put itself in a better competitive position against the Android-powered hardware maker with some control over its supply chain as well. 

In addition, Apple likely won't want the competition to jump in and buy the majority stake instead. 

The Reuters report claimed that Apple could pay 50 billion yen ($483 million USD) by this summer for the 55 percent stake in the screen chip company. 

Sharp Corp owns a 25 percent stake in Renesas as well, while Taiwan's Powerchip owns the remaining stake. It's possible that Apple might go after their stakes in the company as well. 

Source: Reuters

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Vertical integration?
By joeRocket on 4/3/2014 9:31:14 PM , Rating: 2
... components like screens, chips and capacitors.

I really don't get this point. Even if it's true, that's like saying Toyota controls its costs by producing its own components such as engines, transmissions, and rivets.

RE: Vertical integration?
By tonyswash on 4/4/2014 3:54:48 PM , Rating: 1
I really don't get this point.

Apple have been building their bespoke silicon team for a while now, last years A7 was one result as well as the often overlooked M7 co-processor. I would expect to see even more Apple originated silicon in the future.

The way Apple seems to work it's supply chain is to externalise as much as is consistent with reliability of supply and the meeting of required quality standards, and controlling and guiding it through a programme of fairly massive capital investment (Apple's CAPEX has run bigger than Intel's recently) tied to long term supply contracts.

But every so often Apple buys up a bit of the supply chain and that mostly seems tied to taking total control of something considered of strategic and central importance by Apple in relation to it's product pipeline. That means that watching acquisitions is an interesting way to try to see what might be coming. What this particular purchase is about does seem obscure but then so did Apple's acquisition of various chip design companies a few years ago.

"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser

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