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Samsung Terminates LCD Contract With Apple
An anonymous reader writes "Samsung has decided to terminate an ongoing contract with Apple to supply LCD panels for use in its growing range of devices. That means, come next year, there will be no Samsung panels used across the iPad, iPod, iPhone, and Mac range of devices. The reason seems to be two-fold. On the one hand, Apple has been working hard to secure supplies from other manufacturers and therefore decrease its reliance on Samsung. On the other, Apple is well-known for demanding and pushing lower pricing, meaning it just doesn't make business sense anymore for Samsung to keep supplying Apple with displays."
Uhm, Apple has been rapidly reducing their orders to Samsung. Samsung admits as much in the article.
In other words, this is a (lame) face-saving PR stunt by Samsung. "WE'RE CUTTING OFF APPLE'S SUPPLY OF DISPLAY PANELS (uhm, as soon as Apple stops ordering from us)."
To supply google with 2560x1600 panels for the nexus 10?
I'm just guessing.
Demand from Apple went from 15 million to 1,5 million panels and they are in the process of eliminating Samsung as a supplier completely. They have invested in Toshiba plants for a reason. There is also an indication that the reason that Foxconn have invested in Sharp had something to do with Apple. Although I'm more convinced it has something to do with their IZGO panels then AppleTV.
That Samsung "terminated" the LCD contract has zero impact as Apple wanted to eliminate them from the process anyway and seeing how steadily demand dropped (1,5 million are peanuts if you take into account how many products have LCD panels) that process was already underway. The only thing here is that Samsung can save a little face.
So is this pure PR or even damage control. And it is understandable, if a big client like Apple announced it takes it business elsewhere as a company you gonna take a hit.
Samsung displays were actually the only non-defective displays that shipped with the new retina macbooks. Other screens have had huge ghosting issues (I went through 4 laptops before getting a Sammy screen that actual worked right) pretty much fresh off the lot.
It would be nice if this brought these ridiculous issues out into the light so Apple has to face the fact they completely screwed up the retina launch... of course, we all know that would never happen.
It's not that simple.
Apple has been moving away from relying on Samsung for parts, for over a year now.
At some point, one of them was going to cut the ties. The patent lawsuit that turned them from frenemies to just plain enemies was probably that point. And after the outcome, Samsung probably wanted to hurt Apple.
But Apple has been preparing that exit for quite a while now. So it's not too great a hurt.
There are two types of people in the world: Those who crave closure
1: Apple and Samsung get involved in lawsuits.
2: Apple decides to reduce orders from Samsung and order from competitors.
3: Apple demands lower prices for components.
4: Samsung decides to reduce the supply available to Apple.
It sounds like all of those have been gradually happening to a greater and greater degree over time. I don't know which particular item happened first, but once the cycle started it just kept on escalating. The smaller the size of the order by Apple (either in terms of number of components or price per component) the less valuable the contract becomes, and the more Samsung is going to focus on finding alternatives to sell to. The smaller the number of units Samsung makes available to Apple and the less they're willing to budge on price, the more Apple is going to focus on finding alternatives to buy from. The less dependent each of them get on each other, the more the gloves come off in the courtroom. The more lawsuits that get filled, the less comfortable both of them are going to feel about depending on the other to sell/buy components to/from.
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No, it's more likely economic issues. I work for a semiconductor company and we also stopped doing business with Apple (and some other major names) because they believe they wield such power (because of the huge quantities they order) that they constantly break contracts in order to demand lower prices. We were losing money on every part sold to Apple. Finally, the next time Apple threatened to take their business elsewhere if we didn't lower the price a few more cents per unit, our CEO told them not to let the door hit them on the way out. Since then, our profits have gone up.
Wal-Mart is the king of this type of supplier mistreatment, but they are certainly not alone.
When you can make a profit of $4 a part from 20 smaller customers who together buy say, 10M parts, but you lose $0.05 per part on 100M parts for Apple (or another big supplier-raping customer, there are many - just pick a big name), the choice is pretty easy.
Since dumping Apple and a few other major customers we gained hundreds of new smaller customers who could never get our inventory before because all the big players were buying it up. We went from a $2.5B gross revenue company that had a loss every quarter to a sub-$1B gross revenue company that has a profit every quarter. And now many of the big players are coming back, hat in hand, to try to get some of our inventory.
http://www.tomshardware.com/news/Russia-Orthodox-Christians-Apple-Logo-Blasphemous,18567.html
You can't say that 100%. Samsung is very compartmentalized. I worked at a semiconductor manufacture and they were our biggest competitor for DRAM and 2nd for Flash, but they still bought tons of chips for their electronics business from us inspite of the fact that their chip business was trying to price us out of the market. It's counter intuitive, but it's how they do, or at least how they did business.
I got here through a series of tubes
All the talk is of Apple going thermonuclear against Android. Looks like the opposing sides are about to get serious. It might be verging on being anti-competitive but there must be some Samsung execs saying "screw 'em, they wanted a war? We'll give them a war. How long can we run at cost on tablets using the components we would have shipped to Apple to make phones/tablets so cheaply Apple will have no sales for the next year". Then we can get back to dealing with people who are fair. The usual rules of business deals appear to have been thrown out of the window by Apple's aggression, now time to reap the seeds they've sown in the tech sector.
Waiting for an amusing sig.