Samsung Hits Apple With 20% Price Hike

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Dear Apple,

We are in receipt of your request for the $1 billion awarded to you by the courts in California. At this time our company would like to inform you of our intent to remit payment in the form of 20% of the money you give us...over time.

Sincerely,

Your friends at Samsung

"Samsung Electronics recently asked Apple for a significant price raise in (the mobile processor known as) application processor." According to the report, Apple buys all APs used for production of iPhone and iPad from Samsung Electronics with the volume estimated to be 130 million units last year and more than 200 million units this year.
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i just read this somewhere else and the first thing that popped in my mind was..

good on samsung to do this.
 
I can't believe someone at the head of Samsung didn't sit down with Apple and go if you sue us over this we are going to cut you off contract or not.
 
Good for Samsung! It's about time they did something like this, took them long enough though...
 
HeavensCloud said:
Haha. Don't bite the hand that feeds you.
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They could go elsewhere, like GloFo and TSMC, but that would take quite a long time and would leave them without a foundry.

"Samsung Electronics recently asked Apple for a significant price raise in (the mobile processor known as) application processor," the person was quoted as saying in the report. "Apple first disapproved it, but finding no replacement supplier, it accepted the (increase.)"
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The amount of time it would take to transition to another foundry just isn't worth it for Apple. Pay the 20% and shut up was their only choice. But that's what happens when you rely on somebody else -- and a direct competitor at that -- to produce your chips.
 
pelo said:
They could go elsewhere, like GloFo and TSMC, but that would take quite a long time and would leave them without a foundry.
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Which basically means , Apple is fucked. I'm sure they are working on something to change partners but like you said it will take a while. Meanwhile Apple has to ready creation of its next production line update.

Its kinda of a sweet justice when you think about it.
 
Great going, Samsung. Take the wind out of Apple's sails and fire a volley of reality. Apple definitely needed a metaphorical body check like this after all the superficial patent cry baby bullshit they've been pulling.
 
I don't think it was too unreasonable to see something like this coming.
 
Godmachine said:
Which basically means , Apple is fucked. I'm sure they are working on something to change partners but like you said it will take a while. Meanwhile Apple has to ready creation of its next production line update.

Its kinda of a sweet justice when you think about it.
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It was idiotic on Apple's part from beginning. It would be like AMD using Intel's fabs. Though they might provide you with the benefits you're looking for in a particular process, you're ultimately giving money to your biggest competitor. It's just a fucking stupid business decision.

I'd wager Apple is likely looking for somebody else post-2014 and looking very closely at how TSMC and GloFo handle 16nm and 14nm-XM respectively (and probably the 20nm even more). At least with those two foundries you can be guaranteed that they're independent. But that's just the foundry problem, because Apple uses Samsung for NAND, SSD controllers and even displays, means Apple will likely have a whole lot of work to do in order to get that Samsung monkey off their back.

That's the risk of Apple's business model, though. They don't make anything themselves, instead opting to design it, thus they can get absolutely raped when it comes to prices and price adjustments. Samsung is well aware Apple can't go elsewhere so they bumped the price up. And displays? It's LG and Samsung. If you don't like it and don't like their prices you can go fuck yourself :p
 
Apple has built their own chips in the past and I believe they were looking into their own fab facility recently. Good move on samsung nonetheless.
 
I wish Steve Jobs was still alive just because all these blows to the Apple ego as of late would probably elicit some hilarious koolaide response.
 
Only 20%? Should've gone for 40 or 50. If they can't find a replacement supplier, Apple isn't exactly in a powerful position...
 
pgwalsh said:
Apple has built their own chips in the past and I believe they were looking into their own fab facility recently. Good move on samsung nonetheless.
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That takes years and billions and billions of dollars. In 5-10 years that might be a possibility, but until then Apple better get used to paying higher prices and competing with the others for wafers
 
Meh, after all of the retarded lawsuits Apple has put Samsung through, only raising the price 20% seems rather kind of them. I wouldn't have been shocked to see a 50% increase tbh.
 
pelo said:
That takes years and billions and billions of dollars. In 5-10 years that might be a possibility, but until then Apple better get used to paying higher prices and competing with the others for wafers
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Apparently they've been working on it for some time.
 
Here's the actual math folks;

According to iSuppli, Samsung charges Apple $17.50 per A6 SOC.
http://www.isuppli.com/Teardowns/News/Pages/iPhone5-Carries-$199-BOM-Virtual-Teardown-Reveals.aspx

According to the article in the OP, Samsung sells roughly 130 million SOCs per year to Apple. Using the iSuppli estimate, that's roughly $2.275 billion. At a 20% hike, that's a gain of roughly $450 million dollars per year. Oh, and this supply agreement goes for at least 2 more years.

Looks like Samsung passed the cost of the judgment back to Apple.
 
Medion said:
Looks like Samsung passed the cost of the judgment back to Apple.
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Assuming the judgement stands through appeals. It's possible that it won't, in chich case Samsung made an extra $1b over 2 years.
 
pgwalsh said:
Apparently they've been working on it for some time.
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You can't keep a fab a secret. It doesn't work like that...

You need the engineers, which are slim pickins btw, and the tools, which are only available through a single company. There's also a huuuge plot of land and a whole host of testing and government issued permits in order to build and run a fab as there's a lot of rather nasty byproducts and dangerous materials used (along with a metric shitload of water).

Apple is slowly transitioning to a bottom-to-top type of tech company (Samsung being of the few here) with their A6 custom ARM architecture but they don't yet have a fab nor are they working on it and nor is it anywhere in the near future.
 
Medion said:
Here's the actual math folks;

According to iSuppli, Samsung charges Apple $17.50 per A6 SOC.
http://www.isuppli.com/Teardowns/News/Pages/iPhone5-Carries-$199-BOM-Virtual-Teardown-Reveals.aspx

According to the article in the OP, Samsung sells roughly 130 million SOCs per year to Apple. Using the iSuppli estimate, that's roughly $2.275 billion. At a 20% hike, that's a gain of roughly $450 million dollars per year. Oh, and this supply agreement goes for at least 2 more years.

Looks like Samsung passed the cost of the judgment back to Apple.
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Sound economics to me.
 
And I forgot to mention, Apple would have to show to its investors that it's setting apart 10-15 billion in cash for the fab. None of what I've mentioned has happened, meaning that "they've been working on this" is basically an idea floating around Apple's HQ but nothing has yet come to fruition. From the announcement that they'd become their own foundry it would take 5+ years until they produce their own chips off their own lines.

In short, you're talking crap
 
Medion said:
Here's the actual math folks;

According to iSuppli, Samsung charges Apple $17.50 per A6 SOC.
http://www.isuppli.com/Teardowns/News/Pages/iPhone5-Carries-$199-BOM-Virtual-Teardown-Reveals.aspx

According to the article in the OP, Samsung sells roughly 130 million SOCs per year to Apple. Using the iSuppli estimate, that's roughly $2.275 billion. At a 20% hike, that's a gain of roughly $450 million dollars per year. Oh, and this supply agreement goes for at least 2 more years.

Looks like Samsung passed the cost of the judgment back to Apple.
Click to expand...

I think it is because Apple will be ordering fewer chips from Samsung over the next few years, sourcing out more fabs. Apple will no longer get preferred pricing due to volume.
 
LeninGHOLA said:
I think it is because Apple will be ordering fewer chips from Samsung over the next few years, sourcing out more fabs. Apple will no longer get preferred pricing due to volume.
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A good point. However, sourcing out fabrication is an involved process. And it's usually an all or nothing proposition. I can't think of a successful endeavor where the CPU of a device was fabricated by multiple companies. Displays and memory, yes, but not CPUs. Anyone have an example to educate me with?
 
all I can say is haha, and I hope Apple raises it's products to an even more exorbitant price point.
 
Didn't Apple buy it's own fab and stuff recently?

Besides, they could probably empty out the Honor System cans in the Coffee Rooms and buy Samsung :)
 
Steve said:
Dear Apple,

We are in receipt of your request for the $1 billion awarded to you by the courts in California. At this time our company would like to inform you of our intent to remit payment in the form of 20% of the money you give us...over time.

Sincerely,

Your friends at Samsung
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Just goes to show - you should never burn bridges.
 
lol, they need to get some vasoline ready at Apple. Reap what you sow.

Honestly though, as a consumer I am pissed and hate Apple for what they are doing. Not only have they stopped innovating, they've taken to be a litigation firm at best. So they are halting innovation elsewhere and at the same time damning their own products. That equals higher prices for me down the road, whether or not I dislike the iPhone.
 
The jokes on the fools who actually buy apple products. There the ones paying for it, because we all know apple will jack the prices up even more and the suckers will continue to buy their products
 
*If* Apple jacked the appropriate products up 20% in price, there will still be enough people who will buy them no matter the cost. Sad but true. "Fight back at Samsung, pay 20% more for our products, teach them a lesson!"
 
Xonim said:
Assuming the judgement stands through appeals. It's possible that it won't, in chich case Samsung made an extra $1b over 2 years.
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They can put it into their legal defense fund then, since it's safe to assume Samsung will continue to sell more phones than Apple in the foreseeable future, so they'll keep getting sued.
 
Apple is switching from Samsung to Sharp for their displays, and to TSMC for silicon in the future.
 
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