Samsung won't increase the price of Apple processors: report

Samsung won't increase the price of Apple processors: report

Summary: A new report suggests that a rumored hike in the price of the Samsung-built A-series processors that are at the heart of Apple's iDevices hasn't happened.


Hot on the heels of a report that Samsung had hiked the price of the A-series processors used by Apple in the iPhone, iPad, iPad mini, and iPod touch, comes another that says that no price rise has occurred.

An unnamed Samsung Electronics official told Korean newspaper The Hankyoreh (via The Street) that prices have not been bumped, and went on to explain that prices are "set at the beginning of the year and aren't changed easily."

According to Piper Jaffray analyst Gene Munster, a 20 percent increase in processor prices -- which is what was initially being reported -- would have hit Apple's gross margins by about 1 to 2 percent.

Research firm IHS estimates it costs Apple The A6 processor powering the iPhone 5 has been estimated by  to cost Apple about $17.50 per device.

Things have been rocky between Apple and Samsung, since the two companies locked horns in a series of bitter patent battles across four continents since April 2011. In August, a court ruled that Samsung had to pay Apple more than $1 billion in damages for infringing on a number of iPhone and iPad features with its Galaxy S series of smartphones. Samsung has since appealed against the ruling.

In other territories Apple has not enjoyed the same legal success, with courts in the Netherlands and Japan dismissing Cupertino's claims of infringement by Samsung.

However, as pointed out by Apple chief executive Tim Cook during the company's fourth quarter earnings call: "We continue to be a customer of Samsung and continue to have a commercial relationship".

While Samsung may get some pleasure from squeezing an extra 20 percent per processor from Apple, it is likely that the victory would be short-lived. While the A-series processors that Apple uses in its iDevices is made by Samsung, they are in fact Apple's own designs, and the company could shift to another vendor, such as TSMC. A price increase would likely act as a catalyst to make that move sooner.

The bottom line is that Samsung might win a small victory, but may lose the battle in the long term.

How Apple makes products difficult -- and expensive -- to repair

Image source: Apple.

Topics: Apple, Hardware, iPhone, iPad, Processors, Samsung

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • Stop the patent insanity

    I created a petition asking the US Patent Office to review the patents they have awarded to apple that are effecting Electronics consumers.
    Mike Winmill
    • Well...

      ...bully for you, somewhere for the delusional to go while the rest of the world gets on with their lives in the real world.
      • The "real world" will treat you just as much as everyone else

        So, "do unto others as you'd want them to do unto you", what's your real opinion now that you've thought about some nastier details for a while? ;)
  • Adrian...

    How do you get this:

    "Samsung won't increase the price of Apple processors: report"

    From this?:

    "comes another that says that no price rise has occurred."

    Or even this?:

    "prices are "set at the beginning of the year and aren't changed easily."

    Neither of those statements says that they "Won't" raise prices.
    • I said it right away that this whole raise prices thing is *nonsense*

      Contracts are multi-year and there is just no way how Samsung could all of sudden raise prices.

      The more so not while TSMC and Global Foundries dream about having Apple's billions of dollars of orders.
    • No it says they can't.

      They may love to do this, but it means breaching their contracts. It also means sending a clear message; that they are an unreliable supplier to others looking to do business with them.

      I'd believe the thought about it, I'd definitely believe they have a team of lawers checking if they can, but it was always unlikely. At the end of the day they are apple designed and arm are the supplier but a price increase would cause the customer to shop around. It's business not the school playground; you do business with people you don't like all the time; start making business decisions based on whether you like a conpany or not and you may as well hand in your notice. Sure they've given each other enough bloody noses to want to move apart conpletely, but actually what they need to do more is work together, htc style. Investors have no time for petty rivalries unless they make money. The product sell regardless.
      • Apple is already shopping around.

        Apple has already been looking to replace Samsung as a supplier. Nothing Samsung is going to do will drive Apple away, because Apple is already 1 foot out the door.

        Why do you think Apple is suddenly having supply problems with their new idevices?
        • Two possibilities

          1. dwindling resources means fewer items can be made and/or the price goes up (why do you think oil is so cheap, but look at this response of mine in about 12 years from now... do keep in mind this is March 5, 2013...)

          2: staging a shortage can create an impression by the buying public as having higher value (which also helps the parasites over in the stock market)
    • +1

      I guess Newton's 3rd Law of Motion applies to ZDnet... for every article stance, there must be another article that is equal, but of the opposite stance.

      And this is why we take AKH articles with grains of salt. If you read the comments section within the link from the article Adrian is basing his whole article, people are saying Apple prepays for their parts, which I know I've read many times. If you're asking someone that isn't in the accounting department the cost of the goods they are currently using, chances are they are different than the cost of the goods that they bought, but haven't started using yet.

      I also trust Wall Street Journal more than "The Street". If you trust sources without knowing where they money for their funding is coming from...
      • Regardless of what one believes, ALWAYS

        take ANY article with a grain of salt, while giving it the benefit of doubt. It may or may not be completely accurate, using logic that falls apart via parallel situations, etc, etc...

        I'm no exception in having to remind myself of that as well...
  • One needs to understand where the original report comes from

    The report was in the Chosun Ilbo (Chosun Daily), Korea's newpaper answer to Fox News. It is well known for its pro-Korean, anti-everywhere else ultra conservative reporting. Now, I'm not going to say that Samsung won't raise the price on Apple, but I will take a report on Apple emanating from the Chosun with a large grain of salt.
    A Grain of Salt
  • It's a free market, Samsung can do what it wants

    and if Apple whines, mewls, and whinnies it can find someone else.

    Granted, Apple once whined before about purported "unfair treatment" from Samsung, while ignoring Samsung was just obeying the same law of "supply and demand" as Apple does... ;)