Report: Samsung Now Charging Apple 20% More for iPhone Processors
November 12, 2012 12:36 PM
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Samsung hikes up prices on Apple
The legal battles between Samsung and Apple have reached near legendary proportions. Apple won a major decision against Samsung in U.S. courts where the jury awarded Apple $1 billion in damages. Samsung is appealing that ruling and is even trying to get the case thrown out of court by alleging
Apple lost a patent infringement suit against Samsung in Europe and was
forced to run apology ads in major publications
stating that Samsung did not copy the iPad.
Reports are now coming in that Samsung Electronics has recently raised the price it charges for mobile processors to Apple. Samsung supplies the processors for the popular Apple iPad and iPhone.
According to a source claiming to be familiar with negotiations between the companies, Samsung increased the price of processors it provides the Apple by 20%.
"Samsung Electronics recently asked Apple for a significant price raise in (the mobile processor known as) application processor," the person was quoted as saying in the report. "Apple first disapproved it, but finding no replacement supplier, it accepted the (increase.)"
Apple was, understandably, was unhappy with the price hike and initially refused to pay it. However, it came back and agreed to pay the additional costs when no alternative provider could be found.
The source also says that Apple buys all of its application processors from Samsung and purchased an estimated 130 million units last year. The source also estimates that Apple will purchase over 200 million application processors from Samsung this year.
One last tidbit the source noted was that Samsung has a long-term contract to provide the application processors to Apple that runs through 2014. Neither Apple nor Samsung have officially commented.
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RE: Oh! Irony
11/12/2012 2:25:26 PM
I thought about that too, but could their new campus and some data centers really cost that much? There's speculation Apple invested $2B in Sharp to help boost their LCD manufacturing capability, but that still leaves them spending more than twice as much as Intel; who does build fabs.
RE: Oh! Irony
11/12/2012 2:59:32 PM
Intel sells semiconductors, not computers. Apple sells computers, not semiconductors. There is a big difference and there is probably a breakeven point for the FAB that is well beyond what Apple needs unless they start producing their own memory.
Apple has other options, but I doubt other companies will be as flexible on meeting Apple's needs as Samsung has.
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