Will Samsung Remain the Sole Supplier of Chips for iPhone and iPad?

By Karla Robinson
August 28, 2012

Samsung has announced its plans to appeal the U.S. court verdict that found the company willfully infringing on Apple’s patents. Even as it looks to appeal the $1.05 billion decision, Samsung “will not want to put at risk its Apple supply contract which is worth billions of dollars,” reports Reuters.
According to a Samsung counsel, Samsung’s chips, processors and screens account for 26 percent of the iPhone’s component cost.
“Samsung’s component sales could hit $13 billion next year and bring in $2.2 billion in operating profit, according to a recent estimate by Morgan Stanley. That’s nearly 8 percent of estimated group operating profit for next year,” the article states.
Apple has been looking to become less reliant on Samsung by diversifying its supply chain. Likewise, Samsung is looking to expand its customer base beyond Apple. Even so, the two companies are still intertwined.
“Apple needs Samsung to make the iPhone and iPad. Period. Samsung is the sole supplier of Apple’s processing chips and without Samsung, they can’t make these products,” says analyst James Song of KDB Daewoo Securities. “Samsung might be considering lots of options to leverage its components business’ importance and pressure Apple, and Apple could be also well aware of this.”

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