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#1 (Spork)

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Posted 12 November 2012 - 12:22

http://www.androidau...ce-bump-130419/


Every iPhone or iPad or iPod touch that you see in the wild, they all have processors inside that were manufactured by Samsung. Samsung, knowing that Apple simply can’t call another company and ask them to make their chips, raised the prices of said chips by 20% according toMarketWatch. There’s not much Apple can do, and the report confirms that, saying Apple accepted the price bump. It also goes on to say that Samsung made roughly 130 million processors for Apple in 2011. This year that number is expected to surpass 200 million. And the contract that Apple and Samsung have, it doesn’t expire until 2014

So let’s break this news item down. Why did Samsung bump up the prices of their chips? To screw Apple, obviously, but more importantly to make sure that Samsung can keep a greater share of what their factories spit out. The fewer processors Samsung makes for Apple, the more they can make for themselves. What’s Apple going to do? There have been rumores floating around the internet for months that Apple is going to transition to using another fab, TSMC, for their chips. We fully believe the rumor to be true, now it’s just a question of when. TheMarketWatch piece says the contract between Apple and Samsung expires in 2014, so there’s a strong chance you’re going to see some Apple devices with TSMC chips inside hit the market within 24 months.

What impact, if any, does this have on the Android ecosystem? Like we said earlier, the fewer components Samsung supplies to Apple, the more they get to keep for themselves. Samsung is now the number one handset maker in terms of volume. They’d like to keep that title, and that means throwing one of their biggest customers under the bus.

Do we feel any sympathy towards Apple? Not in the slightest




wouldnt that mean samsung has broken there contract with apple opening them up for another lawsuit ?


#2 vetneufuse

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Posted 12 November 2012 - 12:27

sue us and make us pay, we will screw you back since we are the only supplier, makes sense

#3 +d5aqoëp

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Posted 12 November 2012 - 12:28

Apple and Samsung are harming each others business in the long run.

#4 B0mberman

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Posted 12 November 2012 - 12:29

Good for Samsung, hit them where it hurts the most. Apple deserves to get squeezed (Y)

#5 Lilrich

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Posted 12 November 2012 - 12:31

Apple will just start manufacturing its own stuff instead....that way they save money.

Samsung will loose out in the long run.

#6 Eric

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Posted 12 November 2012 - 12:34

Apple will just start manufacturing its own stuff instead....that way they save money.

Samsung will loose out in the long run.


That would require they own an extremely expensive fabrication plant. That's why all their components are made by someone else.

#7 Lilrich

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Posted 12 November 2012 - 12:37

That would require they own an extremely expensive fabrication plant. That's why all their components are made by someone else.


Yes...but the amount they order from Samsung at the moment + 20% is prob cheaper over x amount of years then they can sustain there own.

#8 vetneufuse

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Posted 12 November 2012 - 12:50

Yes...but the amount they order from Samsung at the moment + 20% is prob cheaper over x amount of years then they can sustain there own.


not really, just to build a clean room fab is in the order of billions of dollars alone, just ask intel how much that costs.... let alone the cost to run the place, and materials...

Apple would be better off tooling another fab that isn't samsung

#9 fehu

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Posted 12 November 2012 - 12:50

Yes...but the amount they order from Samsung at the moment + 20% is prob cheaper over x amount of years then they can sustain there own.

no

#10 +Chicane-UK

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Posted 12 November 2012 - 12:56

It's like watching two children throw sticks and stones at each other, and periodically coming in to cry to their mommy about how much of a bully the other is.

#11 Subhadip

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Posted 12 November 2012 - 12:57

Apple will just start manufacturing its own stuff instead....that way they save money.

Samsung will loose out in the long run.


I am sorry, but I am going to assume you have no idea how making semiconductor manufacturing works. You cannot just turn up one fine day and decide to make a chain of semiconductor fabrication plants. Assuming Apple decided to invest $50 billion in manufacturing their own chips and managed to hire the leading professionals in the industry, and everything went smoothly according to plan, the first chip off the line would probably be in 2018 at the earliest.

Their best bet is to acquire a semiconductor fab company. Unfortunately for them the only two that has the capacity to produce 200 million ~100mm2 chips are Samsung and Intel. TSMC is already way over capacity and struggling to meet demand from Qualcomm, AMD and Nvidia. One of the reasons Tegra 3 is still at 40nm is because there simply is no capacity at the latest 28nm process tech. I know TSMC are investing heavily in 20nm process and it is likely they will start making chips for one or two of Apple's products. Maybe they can handle iPod touch. But iPhone and iPad? No chance, not for many years.

I think much of this decision has to do with the growing popularity of Samsung in the smartphone market. Their growth rates are through the roof and it is a simple matter of choosing themselves or Apple. I suppose if Galaxy S4 and S5 continues this trend they would have no choice to boot out Apple in the coming years.

#12 +Chicane-UK

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Posted 12 November 2012 - 12:59

I am sorry, but I am going to assume you have no idea how making semiconductor manufacturing works. You cannot just turn up one fine day and decide to make a chain of semiconductor fabrication plants. Assuming Apple decided to invest $50 billion in manufacturing their own chips and managed to hire the leading professionals in the industry, and everything went smoothly according to plan, the first chip off the line would probably be in 2018 at the earliest.

Their best bet is to acquire a semiconductor fab company. Unfortunately for them the only two that has the capacity to produce 200 million ~100mm2 chips are Samsung and Intel. TSMC is already way over capacity and struggling to meet demand from Qualcomm, AMD and Nvidia. One of the reasons Tegra 3 is still at 40nm is because there simply is no capacity at the latest 28nm process tech. I know TSMC are investing heavily in 20nm process and it is likely they will start making chips for one or two of Apple's products.


And presumably Apple couldn't simply acquire an existing fab and cancel all contracts to start making their own chips - existing contracts would need to be honoured / completed...?

#13 szo

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Posted 12 November 2012 - 13:04

They tried acquiring exclusive rights to production of their chips with TSMC, but TSMC rejected them. Now is the time to start using their cashpile wisely. They actually paid a hefty billion dollars to bail out Sharp and help them setup their plant for the production of the screen displays.

#14 protocol7

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Posted 12 November 2012 - 13:05

Maybe it's also to compensate for Apple dropping Samsung screens for LG and AU.

#15 M_Lyons10

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Posted 12 November 2012 - 13:10

I'm sure the contract Samsung has with Apple allows them to increase the price periodically. Keep in mind, this is a multi-year contract and things change rapidly in tech. Samsung would have to be stupid to agree to a price lock over such a period of time.

And honestly, I think we might be reading too much into this. We DO have an inflation problem presently, which is only expected to worsen... The cost of things IS going up. This could have just been due to that. If Samsung really wanted to just screw Apple, there's a lot of components they build for Apple and they ALL could have gone up in price...

But honestly, if this were done as retaliation, Apple would deserve it for suing so aggressively such an important supplier. If they're that stupid they deserve what they get.

Maybe it's also to compensate for Apple dropping Samsung screens for LG and AU.


I actually didn't realize Samsung was no longer making the screens. That's a shame, Samsung screens are the best out their IMO.

But that's a good point. Apple could have been getting a discount for purchasing more than just the chips from Samsung too... It certainly wouldn't be unreasonable to expect.