Apple has reportedly become Samsung's biggest customer in a move that can boggle the mind. How can Apple, a rival of Samsung's electronics unit, also be the largest customer? And how long can this scenario go on?
According to the Korea Economic Daily, Apple is poised to buy $7.8 billion in components from Samsung. These components range from liquid crystal displays, application processors and flash memory used in the iPhone and iPad.
If you bring this up in conversation, the Apple-Samsung relationship can become a headscratcher. Apple's iPhone battles Samsung's Galaxy phones. The Galaxy Tab takes on the iPad. Meanwhile, Samsung's tablets can't match the iPad on price---even though the Korean electronics provider has many parts lying around the company. Apple CEO Steve Jobs even knocked Korean companies last year. I presume Jobs didn't mean Samsung specifically.
During Apple's antennagate press conference, Jobs said:
“I guess it’s just human nature, when you see someone get successful you just want to tear it down. I see it happening with Google. Google is a great company. Look at everything they’ve created. Would you prefer if we were Korean companies? Do you not like the fact that we’re an American company leading the world right here?
How is this Apple-Samsung thing even possible? Apple certainly wouldn't sell components to Samsung if the roles were reversed. If you carry this line of thinking out to an extreme Apple could squash Samsung with its own parts. It's wacky.
Welcome to the world of conglomerates. Chances are Samsung's chip unit has no idea that the LCD division is also selling to Apple. These parts are only surfaced in some system rolling up financial results.
Everyone is making money so there's nothing to worry about here. Samsung would be nuts to cut off its largest customer in the name of making a few points of margin on a device. But this whole Apple-Samsung does make you scratch your head a bit.