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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1/12/2013 1:59:31 PM
Yeah. The key is that if the company is diversified (both in products and market), it's less likely to fail. Samsung makes a gazillion products and appliances which sell well all over the world, so it's highly unlikely to fail. They may have a problem with one product or one country's market, but that dip will just be a blip compared to everything else. Diversification helps protect you from transient dips in one sector of the economy.
In this respect, Apple is more likely to fail since its product focus is rather narrow, and most of its sales are in the U.S. If a new product or major innovation should disrupt the phone/tablet market, or the U.S. economy should double-dip, they're in for a lot of hurt. Mind you I don't think either company will fail, but if you were to assign probabilities I'd put Samsung at around 0.001% while Apple would be up around 0.1%.
"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook
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