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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."
This clearly seems to be the result of patent disputes...
With the ongoing legal action between Samsung and Apple it’s no surprise that the relationship has cooled.
Curious this wasn't mentioned in the article.
love is just extroverted narcissism
This could not possibly have anything to do with Apple's recent legal activities, eh?
It's what we call "increasing profit".
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Here's a link you can use:
http://www.alibaba.com/showroom/crt-monitor-manufacturers.html
Have gnu, will travel.
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)."
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."
On my third hand, Apple and Samsung have been suing the piss out of one another, and that is beginning to strain other business relationships.
It would appear they've been tapering off their shipments of displays for while. This really should not shock anyone, aside from the fact that everyone knows Samsung hates Apple, companies move to where the components are priced where they want them to be all the time. Nothing to see here, move along.
Its personal, not business.
It actually makes a lot of business sense. If you have to pay them money you may as well pay them with as much of there own as possible. This is more a case of Apple's reliance on them as a supplier being reduced to the point where the return on investment of each panel has dropped.
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.
None of this has anything to do with patent disputes, Samsung tablets, Samsung smartphones, or anything else.
Because gullible American media people believe any lie they're fed by their Corporate Overlords.
-- Tigger warning: This post may contain tiggers! --
Fortunately the Koreans are used to this.
But there's nothing new about this situation. Every manufacturer has the opportunity to employ smart people to improve the products it initially replicates en masse. Some are more predatory than others. I don't believe it's any surprise that Apple is at loggerheads with Samsung after Galaxy of legal allegations that have been tossed back and forth, worldwide between the 2.
If war is the result of diplomatic failure between states, then lawsuits are the result of a diplomatic failure between corporations.
Big Surprise?
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.
That refers to the prices of its suppliers, not to the prices of its products.
Samsung delivery drivers can't find where to drop off the monitors when they use the GPS on their iPhones
No one is ever really supply constrained for long periods of time. On anything that isn't on the periodic table and on earth anyway. You can artificially constrain supply, for marketing purposes or because of voluntary stupidity.
Samsung must figure they can sell the parts to themselves or someone else for more money, a couple of days ago I figured (in a comment on /.) that they were trying to keep their parts and products businesses separate to not lose Apple as a cash cow, but they obviously had other ideas. The Samsung guys aren't going to throw away a million units in sales for the fun of it, and I'm sure if apple wanted to order 10 million units they'd find a way to come to some agreement, but neither party seems all that committed to the LCD panels relationship anyway.
Not if they are building a competing product with your parts.
http://soylentnews.org/~tibman
Apple pushes its suppliers to provide at lower cost. It's our job to push apple to lower its prices, if we want their products....
Can you be Even More Awesome?!
In other news, shares in Sharp Electronics and LG Electronics jumped sharply today, for unspecified reasons.
-- Always borrow money from a pessimist; they don't expect to be paid back.
Why doesn't Apple push its pricing lower, is suppliers are reducing their cost?
Consumers lack the power (or more appropriately the acumen) to act on their own to push their "supplier(s)" to lower their costs. Typically companies do this for us "customers" by competing with other suppliers for space in the market. Such as if multiple Android tablet companies were sparring for customers and driving prices lower on each other. Did I fall into a land of the obtuse? Do I need to even continue?
"but money is the God of Algiers & Mahomet their prophet." - Rich. O'Bryen June 8th 1786
Reason 3: Samsung didn't appreciate being sued by apple?
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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Right, because everyone buys a tablet or phone based on who supplied the display. Oh my, this iPhone doesn't have a Samsung display! I better go buy a Galaxy. That makes sense.
On the other, Apple is well-known for demanding and pushing lower pricing
Since when???
The price they, Apple, pays.
The real question is, if it's so "well-known" that Apple pays less and less for parts with each generation, why aren't Apple customers pushing Apple for lower prices on their finished goods?
I assume it has something to do with that old "sucker born every minute" adage...
An enigma, wrapped in a riddle, shrouded in bacon and cheese
Because $110 billion in cash is not enough.
Seven puppies were harmed during the making of this post.
And the fact that Apple and Samsung have been at each others' throats in court for years has nothing to do with it.
To be honest, I'm surprised they still did any business with each other. Generally when one company gets the other's product banned from sale, it tends to put a strain on the relationship. But in the mobile market where everybody is suing everybody else, it's probably hard to keep track.
sueing the living shit out of your business partners doesn't seem to be a very fruitful negotiation tool for continued contracts!
If "retina display" is used as a scientific rather than marketing term then it shouldn't be copyrightable by Apple. Any display of equivalent angular density should be freely called a "retina display".
Most contracts have a penalty for early termination, any news on one?
That's what happens when you bite the hand that feeds you. Of course Apple will somehow spin this as a positive.
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.
Or, Samsung realized that it could use its manufacturing capacity in making screens for Apple to make screens for its own product and those have a much higher profit margin than they got from Apple.
People bought the iPhone because it was a ipod, phone, mobile communicator, and did all of those things very well. It is a gross oversimplification to say other devices had the features there was no need for the iPhone and the users are just dumb lemmings who buy anything Apple throws at them. Most people who don't "get" iPhones or Apple will never, for the same reason "there are only 10 times of people in the world, those who understand binary and those who don't". You don't get Apple because you can work around huge problems and shortcomings and only typically focus only on the amount of features instead of the quality of a few. People who buy Apple products do so because they "just work". They don't have 50 different ports on them for every competing standard, they don't have a covers, Apple focuses on making a few great ideas work really well, which is why they are successful. Engineers and nerdtypes don't get this, which is why they aren't the visionaries running the companies, they are instead slogging through the ranks doing what they are told.
"You seem the sort to easily fall for bullshit marketing terms. Or are you seriously suggesting computer processors should be marketed as "fast", "super fast", "mega fast", "ultra fast", "super mega fast", "mega ultra fast", "super mega ultra fast", "super mega ultra faster", etc? I mean, that avoids meaningless numbers, and each step is fairly pointless for human comprehension of speed.
You've completely managed to avoid understanding any of Apple's very successful marketing. I mean, you missed the boat ENTIRELY. Talking about relative processor speeds is completely off the table. Mhz, GB, dpi - these things are absent from their marketing for a very good reason. Not even the geeks need it in the advertising. If they want it, they can look it up on the web site.
Apple's marketing is squarely focused on what you can accomplish with the device.
Is this an overextension of what had been the "value of branding" that is actually the corner stone of apple technology? Demanding a higher price for mid-level features but a slicker/pointsy-er/talked-about interface might be old news. Who is ready to short AAPL?
Makes sense... I was thinking lower manufacturing > lower consumer pricing and I know Apple has never done that.
I expected this long ago. Only problem is that wouldnt Apple be samung's biggest customer of their displays, other than their own tablet division?
---- Booth was a patriot ----
Well, the display was the main selling point of the new iPad...
Rethinking email
Samsung cares about the workers and their take home pay. They could not morally bring themselves to slash the pay needed to meet apple's draconian price demands, which would reduce them to even worse working conditions and abject poverty.
On the other hand, apple cares about the US consumers, and passes along the savings of the cheaper screens to the consumer.
"Waste not one watt!" - CZ
http://www.tomshardware.com/news/Russia-Orthodox-Christians-Apple-Logo-Blasphemous,18567.html
Like the parent to your post said, the Nexus 10:
"Google has also been working with Samsung to launch a 10-inch tablet, confirming leaks which suggested Google had teamed up with the Korean manufacturer for another device. Our source tells us that internally the tablet goes under the name “Codename Manta”, runs Google’s new Android 4.2 operating system (previously referred to as Key Lime Pie, but is set to retain the Jelly Bean branding), and will offer a 2560×1600 pixel (16:10) resolution, which we believe will offer around 300 pixels per inch (PPI) compared to the new iPad’s 264 PPI."
http://thenextweb.com/google/2012/10/21/revealed-everything-that-google-will-announce-at-its-android-event-on-october-29/
While Apple generally leans toward uniformity to increase product reliability, this probably has the effect of increasing reliance on single vendors like Samsung, sacrificing the ability to pit one against the other in the event that something they're doing to them is unfavorable.
Actually, Apple's biggest contribution to smartphones was in marketing and convincing everyone they actually needed one. I'm not an Apple hater, but really, almost everything in the iPhone, from a user perspective was already there in other products. What other vendors didn't have was a group of fanatics that would buy anything that Apple put out. The iPhone became an overnight success because of the Mac users who went out and had to have one. That's not a complaint, only an observation. With a loyal customer base, once can pull off anything.
No, what other vendors didn't have was the idea to actually *merge* every (supposedly) existing and up-coming technology. The closest hardware rival at the time was the LG Prada, admittedly the first all-touchscreen phone. But if you saw/watched any reviews of its user interface, it was crap compared to the iPhone, and didn't really take advantage of the touchscreen at all (T9 input, hard-to-use scrollbars, etc).
Technology pricing usually declines over the top of the curve of that technology's widespread usefulness, it's not unique to Apple's supply chain. Apple is usually pretty aggressive about using high-end components in its high-end models, then aggressive about pushing them downmarket in a generation or two (displays are a great example here; see the iPod touch gaining the same screen as the iPhone). They can only do this by taking advantage of declining cost as economies of scale improve and cutting edge features progress. The retail price rarely declines, but neither do margins increase substantially; instead, they regularly cycle through new/improved parts to justify the same prices and margins. And again, it's not so unique, it's fairly common for consumer products. The only reason it's not as common in the computer industry is that the OEM model favors low-margin-high-volume strategies over other kinds of differentiation.
That for example a tablet like the Galaxy Note 10.1 that has 2G RAM can do twice as much as the same tablet with 1G RAM, but now they have to talk specs because that's where the real improvements come. So they use the term "Retina Display" instead of talking actual resolution because actual resolution is a spec and "specs don't matter". Look next for Apple to come out with a 2G RAM tablet but they will call it 'Brain Memory'.
Probably for infringing on some patent or another. Apple is a company run by lawyers now.
Don't be silly. The only thing the iPhone had that competing phones didn't was a good web browser.
The iPhone was missing just about every other essential smartphone feature, and many basic features common to even the cheapest dumphones!
Let's not play-pretend that the launch phone even remotely resembled later models. It was a complete joke. You couldn't install apps, you could copy and paste, it couldn't handle MMS messages, you couldn't multitask, etc. It was absolutely awful.
It took Apple 4 years of free press and reviewers that excused every hick-up and problem (while bashing any fault, no matter how minor, in competing products) before they could even pass BlackBerry in market share. All while Android came from behind and passed them both before Apple even caught up to RIM! The love for Apple, it seems, was not even close to universal in the consumer space. It took a lot of convincing!
(It's a much better product now, obviously, though it's rapidly falling behind the competition on every front -- from tech specs to the nebulous UX. What happened to the last company that sat around producing minor updates to their market-leading product in a rapidly changing market?)
Had any other company released the iPhone, it would have been laughed out of the market.
Required reading for internet skeptics
Well, I could have gone on to describe the active trade war between China and Japan, China and Vietnam, China and the US, and the impact on Samsung of the passive China-SKorea and Japan-SKorea trade wars.
It's not just patents, there are literal riots involving tens or hundreds of thousands of people burning things in China, usually not reported in the US due to the Great Firewall, and the rise of both Rabid Nationalism and Protectionist Trade Wars in many countries is escalating.
Samsung is impacted by that, but the Apple-Samsung patent disputes are just part of what is going on, including supply chain aspects of component parts and licensing.
-- Tigger warning: This post may contain tiggers! --
Apple has so many tens of billions of dollars in cash lying about that they actually don't know what to do with it all.
Apple make ~40% profit on a product that provides ~2/3 of their* revenue. Most companies can only dream of that situation.
So why do they need to push so hard for the lowest possible component price when they are making so much money?
Greed.
*Yes, I actually used the correct spelling. Deal with it.
A Samsung spokesman refutes a report out of Korea that the electronics giant is ending its agreement to supply LCDs to Apple.
so who knows what is true...
There is a report that Samsung is denying that they're terminating the contract with Apple for LCDs:
http://news.cnet.com/8301-13579_3-57537773-37/samsung-says-its-still-supplying-lcd-panels-to-apple/
I have no idea what is true or not, but there are well known hazards believing rumors.
That won't be necessary. Apple will be negotiating volume deals with LG and Sharp that leave them no profits nor any other customers to make profits from. As they go bankrupt slaving for Apple Samsung will be charging their former customers top dollar for the product they can no longer provide.
Help stamp out iliturcy.
"Remember "smartphones" before the iPhone? It took years for any company to remotely match what the iPhone had when it LAUNCHED.*"
* In America, where the cellphone market was so backwards it was easy to achieve. Elsewhere in the world we had devices like the N95 which way outsold the original iPhone and had features like apps, MMS, GPS, and so forth many years before the iPhone did.
Still, nice try.
Nobody said that users were dumb lemmings. What I said was that Apple had an already in place user base that had/has great loyalty. If engineers and nerd types don't "get" the technology, then the visionaries don't have anything to envision. I would posit that engineers and nerd types do get it, they just aren't overly impressed by it, because it doesn't fit their need.
I do agree that Steve Jobs was a visionary, however, his vision was not what made the iPhone and iPad or even Apple successful. It was the marketing firms that were able to articulate his vision into a product that people would demand. Marketers can help provide a vision for those who don't have it, but they also perform the needed function of articulating the vision of leaders who do have it. That is why I said the marketing of the iphone is the biggest contribution. Having the loyal fan base almost guaranteed its success. But, without Apple's marketing of the iPhone, we would still all be using Blackberry's and Palm devices. Apple's marketing team created the notion in the public's mind that we "need" smartphones, regardless of the manufacture (or the underlying technology).
Engineers and nerdtypes do get this, they just don't buy into it.