The patent war is on its way ... and it doesn't look like it will end anytime soon. While, Samsung and Apple continue to move to gain a better market position and make more profit. And for this reason, the Korean company seems to have the intention of raise the price of chips by 20% that manufactures for those in Cupertino.
And, from what is stated in MarketWatch, the talks about the raise have already taken place (and are continuing). It seems that at first Apple refused to the price increase that Samsung wants to carry out, and for this reason it searched the market for different options to stop working with the South Koreans ... but, not finding the right substitute, it has finally had to accept the price increase.
This confirms the interest and offers that the company led by Tim Cook has been making to different chip manufacturers, but it seems that you have not found a suitable supplierWe assume that for the quantity of product you need and, also, for maintaining a minimum of quality in your production line.
A 20% increase: context, scope and strategy
Industry sources indicate that The increase would be selective and targeted to a key client: Apple. Cupertino has avoided clarifying who will assume the additional cost, while Samsung has not publicly detailed the reasons. Among the factors being considered are the proximity to the expiration of the contract supply and increasingly tense trade relations, which would push the Korean firm to maximize profitability of this collaboration as long as it remains in force.
Other market reports have indicated that, in addition to this specific case, Samsung negotiates adjustments of between 15% and 20% with certain customers to offset costs and capacity, especially in more mature node designs. In such scenarios, it is common for the movement impact the final price of some devices or that manufacturers choose to absorb it by reducing margins.
- Target price: +20% in mobile processors used by Apple, with immediate effects according to various sources.
- Motivations: contractual tensions, costs and forecast of gradual disengagement between both companies.
- Consequences: Possible cost transfer to the user or margin sacrifice, depending on Apple's strategy.
The collaboration contract and its validity
This is a very interesting fact, since both companies have signed a contract in which a mutual collaboration is established when it comes to manufacturing Samsung chips and buying them Apple. Therefore, any movement in this regard must be consensual (but conditions are established for possible modifications, something that the Korean company has taken advantage of).
The business is quite lucrative, as it is estimated that the products that Samsung Electronics has supplied to Apple for iPhone and iPad reach figures in the hundreds of millions of units per year in certain periods, with peaks that can greatly exceed 200 million when demand grows.
Independence from Apple and supply alternatives
Information close to the companies indicates that the relationship is maintained mainly by contractual commitmentsAt the same time, Apple is strengthening its commitment to proprietary technology, with processor designs ready to be inserted into its entire portfolio of devicesAmong the options on the table is TSMC as a future large-scale manufacturing partner.
At the same time, Apple has gone diversifying suppliers of other components: RAM and NAND memory with companies such as Toshiba, Elpida or SK Hynix and changes in the supply of LCD screens, seeking to reduce its dependence. Even strategic signings such as that of Jim Mergard (with a long history in semiconductors) reinforce this roadmap.
It is worth remembering that the Apple AX series chipsets They are designed by Apple, But mass production has been the responsibility of Samsung for years due to its capacity, quality and performance. Part of this production has been carried out in Austin, Texas, with significant investments to maintain competitiveness and volume.
Conflicting versions and parallel litigation
There has also been denials from environments close to Samsung who maintain that Prices are set at the beginning of each financial year and are not altered mid-calendar, which would introduce nuances into the immediacy of the increase. In any case, price negotiation in semiconductors is usually conditioned by available capacity, costs and demand cycles, and it does not always accurately reach public opinion.
And all this collaboration happens while in the courts the patent war is still active…the truth is, sometimes we make the strangest bedfellows. Right? The fact is, it seems, Apple will have to pay Samsung 20% more for their products… and that’s no small amount of money.