

Samsung hits Apple with 20% price hike: report - bane
http://www.marketwatch.com/story/samsung-hits-apple-with-20-price-hike-report-2012-11-11

======
larrydavid
Link to original report without the bias:
[http://www.marketwatch.com/story/samsung-hits-apple-
with-20-...](http://www.marketwatch.com/story/samsung-hits-apple-
with-20-price-hike-report-2012-11-11)

Attention-grabbing version: Samsung reacts to recent patent battles by
increasing prices to screw Apple.

Likely reality: 20% increase clause was already in the contract (which doesn't
run out till 2014) or this 'report' is simply false. Surely Samsung can't just
arbitrarily raise the price because they feel like it.

EDIT: I see the moderators have altered the source now, was originally linked
to some Android blog.

------
cloudwalking
> Samsung Electronics has a long-term contract to supply APs to Apple until
> 2014

But Samsung was able to raise the price in the middle of the contract? Is this
typical?

~~~
jemeshsu
Must be a term in the contract to allow Samsung to do so. My guess: likely
that Apple is ending the contract early, and the term is the way for Samsung
to cover its investment in the chip plant.

~~~
2muchcoffeeman
Hasn't Apple been pumping huge amounts of money to allow their manufacturers
to make these plants though? Surely the investment is from both sides? I'm
trying to angle for a reason why they would go ahead an trigger a clause when
they easily have enough money to do whatever.

Aside: I am always surprised with the other comments. Do people really think
there aren't a bunch of terms on a multi-billion dollar contract limiting what
you can do?

~~~
cube13
It might just be Apple invoking an early out clause.

I think that's more likely, considering all the rumors that Apple is planning
on opening their own chip fabs.

------
rabble
Pretty fair, for every $ that Apple steals from Samsung in patent BS, Samsung
raises their rates to charge Apple for chips.

~~~
Terretta
> _for every $ that Apple steals in patent BS_

A billion for aping Apple's design IP doesn't sound like much when Apple has
to pay $370M over the claim that Facetime violates the use of a domain-name
service to set up virtual private networks.

~~~
jklio
<http://www.apple.com/uk/legal-judgement/>

------
benihana
Samsung sees the writing on the wall: Apple is going to ditch them in the next
few years and start building chips themselves. Since the bridge is already
burnt, why not make some extra money off them in the meantime?

~~~
erikpukinskis
Apple has only invested in chip design capabilities, not manufacturing. I
haven't seen any indication that they're interested in fabricating their own
chips. It's a fully mature commodity market, why would they?

~~~
hkmurakami
If fabs were commodities, we wouldn't have the current situation where Intel
continues to be far away the leader in foundry technology.

------
Felix21
Samsung wants their Billion Dollars Back (ROFL)

This reminds me off the time when IBM got all the money they lost in a case
against their union, by reducing the salary of all the employees involved in
the case.

Well played samsung

------
stupandaus
Based on what I've heard from friends at Samsung Austin Semiconductor, Apple
has already moved to swap to TSMC once Samsung's supply contract is done.

------
programminggeek
What is interesting here is that if Samsung loses the Apple contract, it will
have likely huge negative impacts on Samsung. Apple's huge parts purchasing
has effectively bankrolled the R&D and overhead costs of Samsung's mobile
operations for quite a while now. Thus, Samsung is able to use the same
factories and parts in their own products cheaper than anyone else can because
Apple's massive investments make it possible.

If Apple had HTC or LG making all of their parts, it would be much easier for
LG and HTC to compete. Eventually, as Apple moves away from Samsung it will be
interesting to see if Samsung can keep up with Apple as Apple's huge contract
no longer pays for the massive production overhead and R&D costs for mobile
tech.

My guess is over a 10 year period Samsung will lose a lot of its profitability
advantage over other Android phone makers unless it can replace Apple's
purchase volume their own sales.

~~~
caycep
Does HTC do components? My understanding was that they were a top level
handset vendor, as opposed to doing anything w/ components...I assumed they
probably subcontracted with companies in hsinchu or elsewhere for that.

~~~
akgerber
HTC mostly uses Qualcomm silicon, which I believe is often produced by TSMC.

------
twootten
Seems to me Apple will either just suck it up and deal with this, or will look
to internalize their SOC production. Is this something that could have been
possible with their PA Semi purchase?

~~~
wmf
PA Semi was about chip design; Samsung does chip manufacturing. Apple has been
spending enormous CapEx recently (cf. Asymco), so I wouldn't be surprised to
see an Apple/GloFo 22 nm fab come on line before 2014.

------
Stefan_H
Does the author not know how to write quotations? The use of parentheses
instead of square brackets to denote the alteration of the quotation is
confusing and painful.

------
mtgx
Something Samsung should've done from the moment Apple started suing them, so
they can pay for all the frivolous lawsuits.

~~~
Retric
There is a significant risk to Samsung that Apple will abandon them as a
supplier which would do horrible things to Samsung's bottom line.

~~~
saraid216
According to the MarketWatch article, Apple _tried_ and couldn't do so.

~~~
firefoxman1
So it's very likely that Samsung did actually ask for the price hike as soon
as they were sued, and Apple has spent the past few months looking for a new
supplier.

------
damon_c
apparently this is about a $3 price increase and about a 1% increase in total
cost of materials for an iphone.

<http://www.asymco.com/2012/02/26/iphone-sine-qua-non/>

------
shmerl
That's rather strange for Apple then, to cut the branch they sit on.

------
general_failure
Now is the time for Intel to step in.

