Electronics Production | September 28, 2011
Apple to switch from Samsung components?
That the two giants aren't into 'befriending each other' is well known by now. With well above 20 lawsuits between them, will Apple now be looking to push Samsung out its i-products all together?
A coin certainly has two sides, as the saying goes. And this particular one certainly does. However, it might have a similar image imprinted on both sides this time: A gap that is getting wider and wider. Apple, under a constant pressure from Android these days, is not willing to relent a single yard of precious ground. That the Samsung Galaxy S II has been a huge success is troublesome for Apple, to say the least. Analysts have even gone so far as to speculate whether the Galaxy has indeed cut into the hype that usually comes with a new iPhone-release. Furthermore, Samsung is closing in on Apple. The 2Q sales showed that Apple is indeed at the smartphone-top, but Samsung is not far behind, and – with a better growth rate – they are perhaps set to pass Apple. To make matters worse, Samsung is not only competing for sales with Apple. They are also a major component supplier for quite a portion of the iPhone. For every Samsung mobile phone sold, Samsung gets a lot of money. For every iPhone, Samsung also gets some money. That Apple could decide to 'dump' Samsung is thus not entirely surprising. Would Samsung benefit from it? The answer is perhaps a 'definite maybe'. Samsung, well renowned for memory and chip technology might not be willing to share that success with its nemesis. Why? Well, money talks. Fact is that Samsung get around 5.8% for its revenue as a component supplier from Apple. Samsung's own devices however bring around 50% of total company revenue. How would it affect the two companies then, if they decided to indeed part ways? Analyst Nho Geun-chang, working at HMC Investment Securities says in a Reuters interview: "For Samsung, (the) biggest concern is reduced order from Apple. Without Apple's big backing, it would be difficult for Samsung to boost its chip market share sharply. Apple is leveraging the fact that it's got alternative suppliers. They may offer inferior or more expensive components but it's something consumers barely notice and something Apple can successfully use to pressure Samsung."