Samsung hits Apple with 20% component price hike

Samsung hits Apple with 20% component price hikeSamsung has hit Apple with a surprise 20% price hike for its application processors used in both the iPhone and iPad, a South Korean source claims.

Chosun Ilbo quotes a “personal familiar with negotiations between the two” firms as saying Apple at first tried to fight the price hike, but was unable to find a replacement supplier, and so accepted the increase.

The report claims Samsung is the sole supplier of application processors (APs) for the iPhone and iPad, and that Apple is estimated to have bought 130 million units last year, and will buy 200 million this year. The long-term contract to supply the APs runs until 2014.

Given all the bad blood and the legal wrangling between Apple and Samsung, it's easy to jump to the conclusion that this is just another reflection of the increasingly bitter relationship between the two companies.

But to be fair, the original report doesn't clarify whether it was a case of Apple being unable to find a replacement supplier because of the short notice or the volumes required, or whether it couldn't find a replacement supplier any cheaper than Samsung's increased rates.

One way or the other, don't expect this deal to be renewed post-2014.

Via MarketWatch

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matt101101 / MOD  Nov. 13, 2012 at 16:12

One way or the other, don't expect this deal to be renewed post-2014.
Why? Are we expecting a new chip manufacturer, with the same skill set as Samsung, to pop up in the next year and a bit?

martinjjames / MOD  Nov. 15, 2012 at 10:11

Why would it have to be a 'new' manufacturer? Nobody's suggesting that.

I'm not saying Samsung won't be involved at all, but if Apple is trying to lessen its reliance on Samsung components - which is accepted as a given - the deal as it stands now won't be renewed post-2014.


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