Print 70 comment(s) - last by Xplorer4x4.. on Nov 17 at 3:34 PM

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 juror misconduct.

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.

Source: Market Watch

Comments     Threshold


RE: Oh! Irony
By RufusM on 11/12/2012 2:01:44 PM , Rating: -1
Apple looks like they are building something; maybe a fab plant? They spent $8B USD on Property, Plant and Equipment (PP&E) which completely dwarfs what Microsoft, Google, Intel, etc. typically spend on PP&E.

RE: Oh! Irony
By MadMan007 on 11/12/2012 2:10:39 PM , Rating: 3
New 'spaceship' building and campus. New data centers. Not new fabs.

RE: Oh! Irony
By RufusM on 11/12/12, Rating: 0
RE: Oh! Irony
By othercents on 11/12/2012 2:59:32 PM , Rating: 5
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.

RE: Oh! Irony
By name99 on 11/12/12, Rating: -1
RE: Oh! Irony
By AssBall on 11/12/2012 4:30:51 PM , Rating: 3
For 5 billion maybe you could lose your virginity too. But, much like an aircraft carrier, that has nothing to do with the topic at hand.

If you are going to bother posting, don't forget to wipe the drool froth from your chin first.

RE: Oh! Irony
By Icebain on 11/12/2012 8:35:19 PM , Rating: 2

hate to use wikipedia, but 14 billion is a "top of the line" aircraft carrier. If you're willing to settle for "last years model" then you're a bit closer with the Nimitz class haha

RE: Oh! Irony
By Basilisk on 11/12/2012 9:24:37 PM , Rating: 3
$9B is the cost of a Ford class carrier; your price included the R&D which will be amortized over many (supposedly 10).

That $9B just let's you park it in your driveway. The life-cycle cost of one "Ford" is estimated at $35.6B (2012 USD), so make certain you have the pocket change. (This is LESS than the LCC of a Nimitz class, BTW; reduced LCC was designed into the new Fords.)

If you don't already have a carrier strike group, be prepared to lay out further bux 'cause ya can't take your new toy to the wrong side of town without some hired muscle: "A typical CSG consists of the carrier, three or more destroyers, one or two Aegis guided missile cruisers, two or three guided missile destroyers, up two attack submarines, and a combination ammunition, oiler, and supply ship." Start saving today.

RE: Oh! Irony
By elleehswon on 11/13/2012 8:39:19 AM , Rating: 2
Guys. Chill. No one's buying an Aircraft Carrier. Just....relax.

RE: Oh! Irony
By Captain Awesome on 11/13/2012 9:38:48 AM , Rating: 4
Why don't you go back under your bridge TROLL!

No one likes a Ford class aircraft carrier fanboy. They totally copied the Nimitz class anyway, which is better. If I were a pilot, or a sailor, and they put me on a Ford class carrier, I would go AWOL in the middle of the ocean. I would swim for 7 months until I came to either land, or a Nimitz class carrier.

RE: Oh! Irony
By TheJian on 11/13/2012 2:29:46 AM , Rating: 4
Not quite sure what your point is. IT takes years to build a fab. If everyone decided not to make apple stuff this would kill them for X years. TSMC has no trouble keeping fabs 100% and can't make enough (hence they could laugh off Apple/QCOM's 1Bil bid to own their production). Samsung has many options for filling their fabs now that they will probably 100% produce NV gpu's from 2013 on for a while (denver, boulder too). They would all take up slack for no apple products.

Simple supply and demand. If I can't buy an iphone5/6/ or ipad4/5, I don't wait for their fab for 3-4 years I buy a phone from someone else correct? Nobody loses but apple in this scenario and everyone involved with apple loses a WALMART like person forcing you to give a lot of the profits to them due to pricing power. A lot more friendly deals would be made between the rest of the semi's and oems and profits would be quickly growing for everyone since that money would be spread throughout the semi industry instead of making apple get to 200bil cash over the next 3-4 years from the 100bil the have now. It's a no-brainer for everyone to collude and kill them for years. Is there anyone left who hasn't been sued by them? Intel? I don't think they'd lend a hand either. Just pump out the other 10% of macs for more WINTEL's. They may even see an opportunity in phones/tablets etc for their own gear with no apple taking a lions share of a lot of gear.

For the record, Samsung has invested 13Billion in Austin TX fab with the recent announcement of 5B more matching Intel 4B announcement in 14nm. So in answer to your question, NOT MUCH. ONE FAB in 3-4yrs that you might have problems keeping full if android had free reign for 3-4years. Appstore would suffer by then with no new products to buy apps for too, and thus the whole ecosystem gets weaker.


RE: Oh! Irony
By theapparition on 11/13/2012 4:28:45 PM , Rating: 3
Then it's settled. Apple is building an aircraft carrier.

RE: Oh! Irony
By GreenChile on 11/12/2012 4:34:49 PM , Rating: 5
Intel builds new fabs all the time. A new state of the art fab with the latest process technology is said to cost upwards of $10 billion to build and furnish.

Perhaps you should rethink your 'completely dwarfs' statement.

RE: Oh! Irony
By Samus on 11/12/2012 11:08:30 PM , Rating: 5
I seriously doubt Apple will be getting into the supply and manufacturing business anytime soon.

If it isn't obvious Apple makes their fortune on the backs of other "less privilaged" nations, then I don't know what to tell you. The problem is that S Korea is becoming the next Japan as far as electronics and manufacturing so the price parity is closing.

Apple will eventually move more of their supply chain to China, Taiwan, Thailand, the Phillipenes, etc. I wouldn't be surprised if they begin outsourcing software production to India.

Apple is an entirely imported profit corporation, that is, the majority of their products are composed of imported materials, but the majority of their income in from domestic sales. This is in stark contrast to Intel, an export profit corporation, who produces the majority of its products in the United States, but the majority of their sales and income is from exports.

RE: Oh! Irony
By pixelslave on 11/13/2012 12:04:30 AM , Rating: 3
You know, I still have a hard time understand how a business like Apple affect our trade balance. The iPhone is made in China, and we count it as an import? But reports after reports show that the suppliers and factories only profit tiny portion from the revenue of the iPhone sales. Apple is the company that makes a huge profit from the sales, and it's an American company. Do we count the iPhone sales oversea as export?

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer

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