

Apple rethinking Samsung chip partnership, say sources - bootload
http://news.cnet.com/8301-1001_3-57531694-92/apple-rethinking-samsung-chip-partnership-say-sources/

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beloch
An implicit assumption here seems to be that Apple is the one dumping Samsung
when the opposite might actually be the case. Given production requiring equal
fab-space, Samsung may have higher margins on their finished consumer products
(e.g. Android handsets) than on the commodity priced components it sells to
Apple. Given sufficient demand for Samsung's finished consumer products,
freeing up some of the fab space currently used to supply Apple could benefit
Samsung's bottom line.

The truth may also lie somewhere in between the two extremes of Apple dumping
Samsung or Samsung dumping Apple. Samsung might be looking to jack up the
component prices Apple pays for the above (or other) reasons, so now Apple is
looking for alternative suppliers.

It will be interesting to see how TSMC's (or Intel's) component prices compare
to what Apple has been paying Samsung. There may be some price fluctuations in
Apple products over the next couple of years.

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cageface
This reminds me of Schiller's abandonment of Instagram after they ported to
Android. Strange to see such an influential and successful company acting in
such a childishly vindictive manner.

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CamperBob2
Apple has been running completely open-loop for a long time now. When they can
abuse customers, ignore market demands, remove or downgrade key features, and
_still_ sell out of a multi-million unit preorder on launch day, there is no
incentive for them to even ask what their customers want, much less design for
it.

We have the patent system to thank for this. If you want a smartphone that
doesn't suck, you will have to give money to Apple, live with the product's
shortcomings... and pray they don't alter the deal further when the next iOS
version ships.

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mdonahoe
"We have the patent system to thank for this."

Are you claiming that other phones are shitty because Apple has patented all
the good ideas?

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CamperBob2
Yes, because when the government grants monopoly power over abstract ideas --
something the current patent system isn't supposed to do but does anyway -- it
puts its finger (if not its whole hand) on the scales of competition.

Patents don't exist to help the little guy; if they did, we'd have gotten rid
of them a long time ago. An argument in defense of patents is inevitably an
exercise in defending companies that make hundreds of millions in profits
before they even begin to enforce those patents.

The profits should be enough.

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epistasis
This will be far far more damaging to Samsung than a $1 billion settlement
from the patent settlement, as Apple has been buying several billion dollars
worth of parts per year.

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joe_the_user
Uh,

It's not like Apple's been just giving Samsung billions each year. I don't
know Samsung's margin on the sales but it would seem they'd be looking at
loosing several hundred million in profit if they can't find another buyer for
the chips. But maybe they can make up for the lost demand so other way.

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sounds
Agreed, but Samsung will not likely have any trouble moving those chips, even
in today's market. Apple is rightly concerned about them.

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andyl
Hope that in-house chips work out better than in-house maps.

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wmf
Apple has already been using in-house chips for the last three years or so.

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Someone
Of course they are; they would be stupid if they did not.

If you buy a $1 soda, you think about it for about a millisecond. If you buy a
$1000 laptop/phone/whatever, you think about it for at least a day. If you buy
for $x billion of parts every year, you have a huge department that does
nothing but rethinking the partnership. I bet Apple is rethinking its
partnerships with Intel and Foxconn, too. If they can get better stuff and/or
better conditions elsewhere, they will move.

Also, Samsung is both major part supplier and major competitor of Apple.
Because of that, they will want to move because it would cost their competitor
some economies of scale.

