Samsung hikes Apple chip prices by 20 percent: report
Summary: After a series of courtroom battles and lengthy battles, Samsung has hiked the price of its chips, but seemingly to only one customer, Apple, its arch rival in the smartphone and tablet space.
Samsung has hiked the price of its mobile processors by 20 percent, but to only one of the Korean technology giant's customers: Apple.
The report comes from The Wall Street Journal's MarketWatch, citing a person familiar with the negotiations between the two smartphone and tablet makers.
According to the report, Samsung requested an increase in the price of the mobile 'application' processor supplied to Apple, which the Cupertino, Calif.-based technology giant was forced to swallow as only Samsung provides the specific hardware required to make the shiny rectangles of various sizes to work properly.
Citing the source:
"Samsung Electronics recently asked Apple for a significant price raise in [the mobile processor known as] application processor. Apple first disapproved it, but finding no replacement supplier, it accepted the [increase]."
The price hike has already gone into effect, the report said. Apple bought in the region of 130 million Samsung-made mobile processors last year and more than 200 million chips this year to keep up with demand of the iPhone 5 and the new iPads, such as the 7-inch iPad mini.
Samsung's contract to provide chips to Apple expires in 2014.
By then, it may be likely that Apple designs its own chips, gaining further control on its iPhone and iPad supply chain. Late last month, former Apple hardware chief Bob Mansfield was appointed a senior vice president of technologies, where he is charged with bringing the firm's semiconductor and chip-making efforts in-house, cutting out third-party suppliers such as Samsung.
Also, Cupertino recently hired former Samsung and AMD chip veteran Jim Mergard, suggesting Apple wants to retain much of the functionality as provided by Samsung chips -- it would make sense as it would allow backwards compatibility with previous device versions.
We reached out to Samsung for a comment but did not hear back at the time of writing. Apple probably wouldn't comment even if we sent the firm a giant basket of muffins, but we put in questions to the company anyway.
We'll update the piece if we hear back.
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Talkback
Sometimes I wonder about contracts . . .
Sometimes I wonder why businesses seem so eager to accept the entire concept of contracts, as it generally means a great degree of inflexibility.
Done properly
I don't know whether the contract was made public (unlikely) but I'd guess that without it, the price of these chips could have gone a lot higher!
The report is nonsense; there is no way to suddenly raise the price under
And the initial "source" is just one of Korean newspapers, not any direct source within Apple or Samsung that MarketWatch could have.
Under what contracts?
Feel free to publish links to the contracts so we can see the specific terms detailing the maximum price increases based on market conditions etc. If you can, I'll step back and call BS on the article. If not, what causes you to spout BS so much?
wha?!?!
I told you
you didn't believe me then and you are still in denial.
It's amazing what cult followers will believe.
while in the real world, contracts are not one-sided and pricing is negotiable.
Samsung didn't get where they are by being a puppet manufacturer, they know how to do supply contracts.
It's necessary
Samsung, on the other hand, has to plan capacity, build new or expand existing fabs as needed, etc. They have to grow their own business while meeting contract demands from any contracted buyers. They need that buy to be guaranteed for some time to properly make such decisions.
How does Apple expect to keep up
Nothing to wonder about
Acceptance
Consideration
You enter into a contract when you buy a 5 cent piece of bubblegum at the corner store.
If you don't include all relevant details after that, you will have one heck of a time in the court room.
The judge will ask himself/herself: What exactly did the parties contemplate or agree to?
Samsung will probably need more and more of its ship capacity for its own products and does not care too much if it pi$$es Apple off. I guess they will try to make Apple pay for all those stupid law suits costs.
Payback time?
Damn missing edit button
Actually, yes Samsung builds ships
According to Wikipedia, it "is one of the largest shipbuilders in the world and one of the "Big Three" shipbuilders of South Korea."
Nice slogan?
Copyrighted ;-)
Samsung ships it
From Anandtech:
Apple was, understandably, was unhappy with the price hike and initially refused to pay it. However, it came back and agreed to pay the additional costs when no alternative provider could be found."
It's almost over
The trip down the hill to oblivion is close at hand.
Concept of Contracts
But the "Term" of the contract usually defines the "MAXIMUM" period the agreement will last, and there are usually weasel clauses that either party can terminate at any time. It's a Samsung chess move because of the patent case. Quid Pro Quo, you try and shut me down and I will shut you down, or you try to take money from me and I will take it back from you.
Hmmm ... The "Giant Basket of Muffins" approach ...
Ludo
Well...
After all the biting the hand that feeds you... Honestly, is there anyone who didn't see this coming?
Round 2 goes to Samsung...
Not being an Apple fan boy i have always respected the company's innovation and drive. But their latest beligerance based on highly generic or unoriginal patents had eraised a lot of good will towards the company. A generic pencil drawing of a tablet, a slide to unlock feature, etc. etc. Common... Throwing all of that money at the lawyers to enforce those dubious claims seeking the most rigid sanctions against the competitors, rather then spending it on true innovation smells of desperation and creative bancruptcy. US patent system is broken judging by the questionable patents Apple was able to accrue. But even for the valid patents the solution is to license and move ahead, not try to stifle competition completely, especially since Apple cannot possible manufacture enough products for everybody. It's a kindergarden stance of "If i can't have it, nobody can."
The only hope is that Apple's new leadership will see the error of their ways and come back into the light.
Rock and hard place
"No Steve/Tim, they said we should shove them where the sun don't shine"
"Well lets sue the sh*t out of them then"
"Yeah great idea, errrrrr, what are we doing for chips going forward???"