Is Apple calling Samsung’s bluff?

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The relationship between the two tech titans Apple and Samsung is an interesting one. While they compete heavily in the smartphone and tablet markets with their flagship products, Samsung is also one of Apple’s key suppliers. In fact reports suggest that Apple planned to make component purchases of about $7.8 billion from the Korean giant in 2011.

Recently the companies have been engaged in suing each other. Apple maintains that Samsung’s Galaxy S phones and tablets infringe their patents and basically are a rip off of the iPhone and iPad. On the other hand Samsung is counter-suing Apple for similar reasons.

How did it come to this? Well this is purely my opinion but I think that Samsung gambled. You see the supplier – customer relationship between Samsung and Apple is deep because of the fact that Samsung can provide unbelievable amounts of memory and logic chips. Apple in fact constrained the NAND Flash market by buying up all the memory they could via bulk exclusive deals. The company prepaid a lot of money to get good prices on memory and chips for its iPods and later iPhones. I was working at a prominent semiconductor a few years ago and Apple was a customer as well. So I think the people at Samsung thought if they copy a bit (or a lot depending whom you ask) of the iPhones/iPads design Apple will not dare to sue them and even if they do the relationship and a perceived dependency on Samsung will force Apple to settle in a favorable way for Samsung.

If this is indeed what happened than it seems Samsung miscalculated. Apple is suing them in a number of jurisdictions and has successfully blocked the sale of the Samsung Galaxy S tablets in some of them. Samsung is countersuing and most likely would like to force Apple into settlement talks. But if you read the news you will see that Apple is fighting this war on another level. DigiTimes is reporting that Apple is shifting its memory purchasing away from Korea to Japan and processor manufacturing to Taiwan. The purpose is of course to reduce its reliance on the company on the other side of the lawsuits. It seems that Samsung could lose substantial business from Apple.

Samsung may have hoped that Apple would not call their bluff but historically Apple does not like to play games. Especially if partners screw them.

 

  • Me

    Mate, Japan only have specialty memories in hand. General ones are made in Taiwan/Korea/China. So whether the Apple like it or not it must buys memory from Samsung. Because there are no-one else to buy from. You should know that, you have been working for one the DRAM supplier anyway.

  • http://www.jancifra.eu Jan Cifra

    It is not about generic DRAM. I think both Toshiba and Elpida in Japan produce memory – Nand and Mobile Ram. I agree that nobody can supply the amounts that Samsung can but that is the point. Samsung hoped and maybe still hopes that Apple will be unable to diversify its purchasing away from Samsung. I am saying Apple is calling that and let us see whether it was a bluff or not.