Samsung Backs Apple Into A Corner With 20% Price Hike On All Mobile Processors [Report]

Killian Bell (6:41 am PDT, Nov 12th 2012)

Samsung currently supplies all of Apple’s mobile processors.

Samsung has dealt Apple a nasty blow by increasing the price of its mobile processors — the ones built into every iPhone, iPad, and iPod touch — by 20%. According to a person familiar with negotiations between the two companies, Apple initially disapproved the price hike, but was forced to accept it with no replacement supplier available.

“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 buys all of its mobile processors from Samsung, and it’s estimated that it will purchase more than 200 million units this year, following the 130 million it purchased last year.

Since Apple and Samsung have been embroiled in a handful of lawsuits against each other all over the world — the biggest of which saw Samsung fined $1.05 billion — it has been reported that Apple is working to move away from the Korean electronics giant and source its components from other companies.

However, it seems Samsung has Apple backed into a corner when it comes to mobile processors. Knowing there’s no other supplier, it can hike its prices and Apple has no choice but to accept them. At least for now. Maybe this is Samsung’s way of getting its $1.05 billion back.

Source The Wall Street Journal

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Comment »

jonathanober
my the turn tables have…
TeeJay2000
This is referred to as a “stick up”. I am surprised that contracts were not in place for longer, but I guess Apple was ordering ‘month by month’ from Samsung.
http://www.facebook.com/people/Len-Williams/100000105785737 Len Williams
I’ve long wondered why Apple continues sourcing parts from Samsung despite their long ongoing battles. Apple has plenty of cash to build its own processor plant, but possibly not the expertise. I would bet we’ll all be hearing about Apple’s new factory within less than a year of this announcement.
FriarNurgle
Apple is going to kick Samsung to the curb on of these days and just end up making everything themselves.
jdsonice
In the long run this is bad strategy. Samsung could have used this for long term advantage by talking to Apple and resolving the issues the two companies face. Instead they decided to get militant. I guess I feel sorry for them. They have no game compared to Apple.
- Daniel Černoch
  what do you mean, no game comapred to Apple
- Nathan Cox
  Samsung has a long history of playing nice with Apple. Apple, on the other hand, decided to bite the hand that fed it by suing Samsung over trivialities. The “issues” these two companies are facing revolve entirely around Apple being a dick.
  Raising the price on these processors is simply backlash from Apple being a prick.
- http://twitter.com/radotsanev Rado Tsanev
  Samsung are the biggest electronics maker in the world. Apple makes the majority of their money form App Store and iPhone which relies on Samsung components. I am not saying that Samsung will rule over the iPhone. But on the hardware market Samsung are much bigger than Apple. It will be interesting battle in the next few years
Windlasher
in 60 – 90 days, Apple will announce that it is building a chip manufacturing plant in Nebraska or somewhere like that or has re-tooled a plant or gotten intel, or AMD to make the chips for them.
I’d bet money the AMD president has a call into Apple at this very moment.
- Nathan Cox
  The real issue here is that there’s no way they could build such a chip to work in the same infrastructure as the current chip without violating Samsung patents. Samsung wins either way. Good for them.
  - Windlasher
    My understanding is that Apples chips are designed/owned by apple. SS just manufacturers them. Should be no problem.
    - damineg35
      Big problem and costly but deserved
      - TheSharpieOne
        Its alright, they got a 1.05 billion kickstart investment curiosity Samsung. If I was Samsung, I would just stop supplying the chips
        causing a shortage of iPhones, iPads, and iPod touches causing prices
        to sky rocket and driving people away from iOS right to Android and
        Samsung products. But thats kinda bad business and wound just make Samsung really bad.
    - Ikenna Mbonu
      It is an EXPENSIVE problem. Most of the cost involved in manufacturing chips is the fixed cost in setting up fab plants. On the scale that Samsung has for servicing Apple orders (not even involving other customers) it will cost Apple BILLIONS of $$$ to set it up. Operational headaches, etc, will also be involved.
      - Windlasher
        Billions they got!
  - http://twitter.com/Gamer_Guild Marc Greenberg
    Actually the IP on apple chips is licensed by ARM the source code is owned by arm not samsung or apple
- Akkul Sahariya
  Apple Mobile processors by AMD/Intel. wow.would love to see that.
  - Windlasher
    Would be cool methinks.
- gsfddsaf
  Involving intel doesn’t make sense, x86 isn’t as power efficient as arm
  There are rumors about amd arm, though it’s easier for apple to build their own soc
  - Windlasher
    Thats not what I meant. I was thinking that intel already have the expertise so Intel could gear up a few lines to make Apples chip.
Nicholas Vettese
Apple is already moving away from Samsung, so F*** Apple. Now those who nned their iDevices will pay even more. Good for Samsung!
http://www.facebook.com/people/James-Anders/741405069 James Anders
So why was this posted on Cult of Android? Red meat for the opposing crowd?
Kenneth Sills
Now, Apple, I have a question. Why in God’s name would you cause a
company that you NEED to buy from to lose $1.05 billion. You are the dog
that didn’t bit the hand that feeds you, you viciously slaughtered a
bus full of people, then when you got home, cut off your owners left
arm. I cannot wait until this dog is finally put down.
- BigMixxx
  I’v been wondering when Samsung would bite back at apple with these parts. How that hell do you sue the company you buy stuff from. I understand defending intellectual property. BUT DAMN….
bobjohnson28211
Do those processor have rounded edges? If so, better watch out.
David Bucci
Gee, Apple has SO huge a profit margin per device … yet someone things their component suppliers don’t deserve some flow-down?
Autolycus21
Samsung: WE AIN’T GO NO WORRIES!
http://www.facebook.com/LinoNoble1 Lino Reynoso
A hard blow!
Lyndon Boychuk
A million per chip would be a fair price for apple…since Sammy had to shell out more than a billion for apple’s amazing rectangle technology.
http://www.facebook.com/brad.kalinoski Brad Kalinoski
Perfect. Love to see this. Apple has a limited time before it returns to its former self. And all because of the last wishes of a dying man.
http://www.facebook.com/profile.php?id=680039743 Jon Curley
Rooting for Sammy on this one
stevi555
Got Iphone, got Galaxy. Galaxy wins. Hands down. Nice one Samsung.
http://www.facebook.com/KBM.CO Kellen Miller
Samsung definitely copied apple so did google. Samsung has raised the price but they did not give us the reason. The real reason might be that apple will not need them after this year. They have a chip that might be better.
- http://www.facebook.com/jeremyttyeung Jeremy Yeung
  You can simply not find another company that can produce that much of high tech chips in a short period of time for the demand of iPhone, iPad and iPod. Samsung can raise the price as much as they want. If Apple doesn’t like it, go choose another manufacturer. But that’s is not gonna happen since Samsung is the ONLY company in the world that can keep up with that amount of chips. That’s also why most devices out there consists of Samsung parts.
  - Matt
    There are these crazy places called TSMC and Globalfoundies that make graphics chips for Nvidia and AMD. Billions of complex chips. There are alternatives and Apple will use them.
- VTREX
  How did Samsung and Google copy Apple?Please do explain how thed whaty copied an did they copy?Didn’t Apple copy from android in the first place?Now listen up,android was already in the works way back in the early 2000′s.Way before ios or the iphone even came out.It was formed by Android Inc. and backed by Google and then they later purchased it in 2005 build it up to what it now today.Understand one thing,Apple is under rated they deserve what’s coming to them.
imajoebob
Careful, Samsung. You just increased the likelihood of a viable alternate supplier by at least 20%.
http://www.facebook.com/don.i.jackson Don Jackson II
The should have doubled the price and shut Apple Down LOL!

About the author

Killian Bell is a freelance writer based in the UK. He has an interest in all things tech and also writes for TechnoBuffalo. You can follow him on Twitter via @killianbell, or through his website.

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Posted in Android, News | Tagged: A4, A5, A6, Apple, Cupertino, iPad, iPhone, ipod touch, mobile, processors, Samsung |