Samsung Shys Away From Apple, Plans To Sell Chips to Chinese Smartphone Makers Instead
January 10, 2013 11:14 AM
comment(s) - last by
Samsung's Stephen Woo
Apple will purchase about $8.8 billion USD worth of chips from Samsung this year, but then decline
With Samsung and Apple's relationship turning sour in recent years due to patent litigation, Samsung recognizes that it must move on and
supply its chips elsewhere
-- and it's looking to new Chinese entrants in the mobile market.
At the Consumer Electronics Show (CES) in Las Vegas this week, Samsung's President of LSI business Stephen Woo said that it's crucial for the South Korean electronics maker to focus on alternatives to Apple when it comes to the chip sector.
"As there are just two smartphone makers that are doing really well, chipmakers supplying them have grown in tandem. So we plan to bolster our relationship with those key customers," said Woo.
"(We) should diversify our customer base and are making such efforts already, adding some Chinese customers. We see emerging players who have potential to grow in smartphones and we will continue to make efforts to supply them with our chips."
Samsung has already made a bit of headway in its latest decision. It has been supplying Exynos quad-core chips to Chinese smartphone company Meizu and also to Lenovo's K860 LePhone.
Samsung is forced to move on to other chip customers now that Apple has turned into an enemy. Samsung was the main supplier of Apple's iPhone and iPad chips, which made up a bulk of Samsung's chip-making efforts along with its own Galaxy line. However, after a
nasty patent war
broke out between the two nearly two years ago, Apple has been distancing itself and will make its own chips.
According to Goldman Sachs, Apple will purchase about $8.8 billion USD worth of chips from Samsung this year, which is about 80 percent of Apple's allowance for processors, memory chips and screens. But Apple is expected to move 30 percent of its business away from Samsung next year and about 80 percent by 2017 -- meaning Samsung better find new clients.
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RE: Wait a sec...
1/11/2013 4:12:29 PM
While the US is estimated to be near saturation, there are numerous markets that are just getting started, and are no where near being saturated.
In the US alone, there are still more dumb phones than smart phones sold, and many people want the latest greatest and will continue to buy what is put out.
RE: Wait a sec...
1/11/2013 6:01:07 PM
You are assuming these people will be buying Samsung in the future?
It's been proven that the only way to make a profit is to aim for at least a portion of the premium market. Putting Apple aside there's only one feasible way of doing that right now, possibly two in the future, Android and Windows.
And what phones fanatics use today will be used by non-fanatics when they are passed on tomorrow, possibly by emerging nations through recycling schemes. Do you think the nearly 50% of the worlds population living on less than $2.50 a day give a shit about spending money on this crap when they are struggling to survive?
The market will not grow for much longer and is not sustainable. The best new phones are already at the point where most people are saying "so what? to most new features so there really is no compelling reason that this is a good outcome for Samsung at all.
"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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