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back to article Samsung turns screws on Apple, hikes A6 processor price 20%

Samsung has hiked the price of processors used in Apple's iDevices by 20 per cent and the fruity firm has had to suck it up, Korean newspaper Chosun Ilbo said. A source told the paper that Samsung said it wanted more moolah for its application processors and Apple has had to accept this because no one else can fulfil the …

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Stop

Re: Samsung by design

It's not trivial to move from one process to another. It takes careful tuning to make a set of masks for a particular manufacturers process (I understand that the newer A5/A6 chips are built on 32nm HKMG, and TSMC skipped 32nm and went direct to 28nm so it's a half node step in addition to new masks)

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Weell

There's already been rumours of Apple approaching Intel. And other fabs.

So, maybe Samsung thought, hmm, we're not going to get the next generation of contracts anyway. So let's screw Apple while we can?

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This is a decade that will live in history..

It has seen the end of Steve Jobs, it will soon see the end of Apple (apologies to the writers of Star Wars)

I and others predicted this and its happened and left Apple up to their necks in it. I made another prediction back then, that you can't afford to treat your suppliers like crap when you're in a specialist field. Apple are, whether they like it or not one step away from losing Samsung as a supplier, and with timescales how they are and the prevalence of Samsung processors that could easily put them into a rather unpleasant RIM style tailspin.

Well done, Apple, you've all but signed your own death warrent. Oh and word to the wise, don't try to dictate terms to us until you've bought Whitehall; and even then we won't listen. You screw with the British courts at your peril!

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Re: This is a decade that will live in history..

Biggest load of tosh I've heard in ages. 'End of Apple'? Give me a break - I've been hearing that crap for the last 20 years. Remember how Microsoft would eventually do for Apple? And yet who's the biggest tech company in the work by market cap right now? That's right - Apple. They're worth more than Samsung, Microsoft, Google and any of the rest.

Apple know how to survive and prosper after any setback and they'll get over this one. They make such high margins on their kit they can easily cut into them a bit to absorb any price increase from Shamsung. Hell, even if they don't do that, then the 'fanbois' will still be more than happy to pay a few extra bucks to get their fix. And that's only up to the point when Apple do away with Sammy as a supplier completely. Do you really think Cook and Co haven't already played out this little scenario and come up with a long term strategy?

As for an 'unpleasant RIM style tailspin', RIM are a dead company walking because they took their eye of the ball and started turning out crap hardware and software that nobody wants and not because someone increased their chip costs by a few quid.

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Re: This is a decade that will live in history..

@Graphsboy - Apple survived because of Microsoft, and Microsoft giving them a bit of spare change that they had laying around, why? Because Microsoft *needs* a competitor, if Apple had died then Microsoft would have 99% market share and total domination which the regulators wouldn't like and so would have most likely forced Microsoft to split the company up to allow other competitors into the field.

The problem with Apple is that it's not really used to success, it's used to failing, now it has a whiff of being "top dog" and it's still trying to get away with the crap that regulators allowed it to do when it's competition was Microsoft, but being a big company they find that the regulators get pissy if they try to abuse their position, so it should stop acting like a company that is about to go under and start acting like a company which isn't going to get hammered by the powers that be.

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Re: This is a decade that will live in history..

@David Web - Utter nonsense. When MS and Apple settled Apple still had over $1 billion in the bank. Microsoft took a token $150 million share holding and promised to support Office on Mac OS. They also cross-licensed their patents.

Apple have been increasingly profitable for over 14 years now. They pretty much own the MP3 player market, and have done since 2004. They are the most profitable seller of mobile phones in the world, have reinvented the category of tablet PC and own something like 60% of that market by volume (and rather more by value). I'm pretty sure that qualifies as being used to success.

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Anonymous Coward

Re: This is a decade that will live in history..

lol - what, this market?

http://news.cnet.com/8301-17938_105-57408833-1/apple-should-dump-the-ipod-touch/

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Holmes

Re: This is a decade that will live in history..

"They pretty much own the MP3 player market". There IS no standalone MP3 player market any more. Anyone who wants mobile music players already has one on their laptop, tablet or smartphone (and pretty much any feature phone, too). There is no reason to own a 'Personal Stereo', now. Don't bother coming back with 'sound quality' arguments. Mobile music players are used in noisy urban environments, totally unsuited to audiophile conditions. The new ergonomic Apple earbud thingies don't change a thing.

If you want background music on the go, use your phone and a pair of earbuds. If you want a glorious celebration of the music you love, fire up the hi-fi through speakers whilst chilling on the sofa of your own home.

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Re: This is a decade that will live in history..

"Biggest load of tosh I've heard in ages. 'End of Apple'? Give me a break - I've been hearing that crap for the last 20 years. Remember how Microsoft would eventually do for Apple? And yet who's the biggest tech company in the work by market cap right now? That's right - Apple. They're worth more than Samsung, Microsoft, Google and any of the rest."

Are you retarded?

You know that Apple only exists today because Bill Gates gave them billions in free money so that Microsoft wouldn't get 100% market share and get dismantled by the government, right?

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Re: This is a decade that will live in history..

Steve Webb's account is accurate. Microsoft didn't save Apple. They only invested a few million for a deal based on mutual benefits. The only retard here is yourself for plucking a figure of billions out of mid air and convincing yourself it's true.

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WTF?

Re: This is a decade that will live in history..

"You know that Apple only exists today because Bill Gates gave them billions in free money "

In your spare time you do numbers for Fox news right?

The Microsoft fanbois are starting to sound like the American "Tea Party".

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Anonymous Coward

Re: This is a decade that will live in history..

And don't forget the "smoking gun" was a bug in the quicktime codec that had mysteriously been coded into the supposedly white room Microsoft implementation. Microsoft and Apple both benefited from the deal in the long run, expecially the long term support commitment for Office. The cash was trivial.

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Can apple buy Foxconn or some other manufacturer?

If they built their own stuff wouldn't that save money? Or does their buisness model rely on exploitng Chinese workers on low wages?

If they opened their own apple factory in China could they not get away with it then?

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Re: Can apple buy Foxconn or some other manufacturer?

The positive with building your own stuff is that a vertically integrated supply chain reduces the risk of sudden price hikes or supply shortages. That's why Samsung do it.

The negative is that it ties you to a particular production strategy (as others have said, the upfront costs of technology mass-production facilities are phenomenal, so you can't change your mind halfway) and so if you get it wrong it weighs on the reliability and cost-efficiency of your end product. That's why Apple (and most producers of most electronics) don't.

The question of whether outsourcing your low-margin production and focussing on high margin design and distribution is a good strategy (because it supports a higher margin and more flexible business) or a bad one (because it makes your business more vulnerable to the long term plans of the people who make stuff for you) is in some ways a question about the entire western strategy of outsourcing low value jobs.

That will make Apple's long-term success or not against HTC (used to make mobile stuff for other people but now mostly a consumer brand) and Samsung (ditto but bigger) particularly interesting.

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Re: Can apple buy Foxconn or some other manufacturer?

It's not just Apple who use Foxconn. Foxconn's major customers are:

Acer

Amazon

Apple

Cisco

Dell

HP

Microsoft

Motorola Mobility

Nintendo

Nokia

Samsung Electronics

Sony

Toshiba

Vizio

So if Apple did buy Foxconn, they could make some of their own stuff, plus stuff for the above. Can't see them welcoming Samsung with open arms unless there is a serious ceasefire.

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Anonymous Coward

Re: Can apple buy Foxconn or some other manufacturer?

It is the same think like asking if you can build communism in the US. Sure you can do it but the real question is would it worth all the trouble ?

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Anonymous Coward

@Bernard - Re: Can apple buy Foxconn or some other manufacturer?

Apple has just managed to knock off HTC so it will now turn to the other two that are left : Samsung and Motorola. Lacking money and some good patents, HTC couldn't show anything more than a 6in knife to heavily armed Apple (and Microsoft), so right at the negotiation table they were swiftly promoted on the menu without any further formalities.

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Re: Can apple buy Foxconn or some other manufacturer?

Foxconn isn't a manufacturer. They assemble things.

How do people know this little about the world and business? Scary.

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Anonymous Coward

Re: Can apple buy Foxconn or some other manufacturer?

Samsung have no USP / loyalty from it's customers - people are buying Android not Samsung. Motorola (Google) is probably just as big a threat to them as Apple are.

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Anonymous Coward

Re: Can apple buy Foxconn or some other manufacturer?

Before you go around crying 'exploiting' had you considered these people travel a long way to apply for jobs there as they are better than the alternatives. Take these jobs away and are you improving their lives?

Sure it's difficult for us in the west to see $10-20 (or whatever) for a 10-12 hour working day as a decent wage as most would expect that per hour - or often considerably more. But you do have to ask yourself - are they being 'forced' to work in these factories - they may have to as they want to earn a better wage - but it's not gun to head / slavery.

People are too quick to condemn the companies - but take the companies away and the jobs are lost - lose the jobs and what do they have - most likely lower paid, near subsistence farming - oh and remember it's not just Apple that uses these factories.

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Re: Can apple buy Foxconn or some other manufacturer?

@Bullseyed

Foxconn isn't a manufacturer. They assemble things. How do people know this little about the world and business? Scary.

I'd keep quiet if I were you, after all you did claim that "Apple only exists today because Bill Gates gave them billions in free money so that Microsoft wouldn't get 100% market share and get dismantled by the government". What a joke. MS bought $150M of non-voting Apple stock to support continued development of MS Office on the Mac, which they sold back later for a massive profit. Get your facts straight before you point fingers at others!

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clang

This just shows what happens when you bite the hand that feeds IT...

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reality check?

don't you all think that a big company, Apple or anyone else, would have cast iron contracts that forbid price increases mid contract or at the very least an increase within a certain range. So we have to make an assumption here that ALL Apple's contracts with Sammy are ending all at the same time before adding up the extra costs.

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Re: reality check?

Obviously you never had a phone contract in the UK.

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Anonymous Coward

Re: reality check?

My guess (hey I should be an analyst) is Samsung have a tiered (volume based) pricing and Apple are souring most of the components from elsewhere and topping up from Samsung but as volume is lower Samsung are charging more.

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Thatl teach them not tho fuck the branch they're sitting on in the ass.

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Anonymous Coward

Apple will surely be taking everything away from Samsung - so yes they may charge more for some of it's processors it's only a matter of time. Then wait until HTC or Asus or Motorola come out with the next best new shiny Android phone and people would stop Samsung like a pile of poo.

Could anyone genuinely say (without laughing) they would buy Samsung next time if someone else was making a better Android handset = no = no loyalty. Things can change very quickly in the Android marketplace and surely Samsung must feel the risk?

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Anonymous Coward

Agree

Its happening already. LG nexus 4 is coming out today at half the price og Galaxy s3 and Im buying one.

Compare the specs.

Samsung are also doing an Apple in terms of price gouging.

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Anonymous Coward

Maybe Apple should make some unholy alliance with Google / Motorola - I'm sure Google don't want to be locked out of all those millions of Apple tablets and search. Samsung could see themselves back as a maker or pretty average handsets very quickly - it's not as if they make the OS etc. Samsung are far more at risk from competition from HTC, Asus and other far eastern manufacturers as there is so little to differentiate and it's coming down to cost.

The average Joe Public does not really care if their Android handset say HTC or Samsung or Motorola.

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Re: average Joe Public

The average Joe Public does not really care if their handset is Android or anything really, as long as it does what they what or think they want and costs what they think is the right price. My parents a couple of years ago bought iphones, they where in the shop looking for smart phones and faced with a load of phones all at more or less the same cost a month so went with apple as they'd heard of it.

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Anonymous Coward

Re: average Joe Public

An excellent choice - my 3GS is still going strong after 4+ years while a colleague is now on his 3rd Android - not really by choice but because he gets no support / updates after 12-18 months.

So if you are not someone who feels the need to change phones every 12-18 months there is a good chance an iPhone will cost you less.

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Re: average Joe Public

> So if you are not someone who feels the need to change phones every

They aren't but now have android phones. Turned out they couldn't use their phones to do everything they wanted. If our entire family lived and breathed apple they could probably make do but they don't and even then they would still be doing just that, making do.

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So the I-fleece will probably go up in price by 25% to compensate.

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Anonymous Coward

20% on the ones it buys from Samsung - for all we know they are only actually buying a small(er) percentage of the CPUs from them.

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It's not robbing Peter to pay Paul..

..it's robbing Peter to pay Peter.

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FAIL

....that actually make things....

This "author" is obviously a troll!

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Re: ....that actually make things....

What things does Apple make then? Physical things, not software, designs, patents, or lawsuits.

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Anonymous Coward

Re:Earl Jones Of Potatoes

Are you related to the King of the potato people? I think you must be with comments like that.

4 hours W.O.O.

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Happy

Re: Re:Earl Jones Of Potatoes

Well after browsing through the other foaming comments all of which have variant values of truthiness and truthfulness, a big dumb "troll" affirmation made me smile.

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Anonymous Coward

It couldn't happen to a nicer company

Apple is so unscrupulous that they are going to be spending a lot of money on litgation costs for frivolous lawsuits. It's good to see the UK judicial system punish Apple for their uncivil behavior.

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Anonymous Coward

Re: It couldn't happen to a nicer company

Samsung remember and eye for an eye and the world goes blind.

I suspect they hiked the price as Apple were actually ordering far fewer - probably buying the bulk from another vendor and topping up the balance they cannot make from Samsung. So yes they may pay 20% more for the component but only while the other ramp up and perhaps only on a small part of their total requirement.

It's not as if Samsung are the only people that can make these processors.

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Anonymous Coward

Re: It couldn't happen to a nicer company

And Samsung are ANY better - doubt it.

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The customer always ends up paying for any additional costs...

Apple being Samsung's customer ended up with the cost which they were involved in creating, but will they pass off their costs to their customers?

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The adventures of Rosencrantz and Guildenstern in Cupertino -

«For 'tis the sport to have the enginer

Hoist with his own petar; and 't shall go hard

But I will delve one yard below their mines

And blow them at the moon: O, 'tis most sweet,

When in one line two crafts directly meet.»

Henri

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Happy

Serve's GREEDY APPLE right.

This is true KARMA, what goes around come's around, hahaha. Apple sued Samsung and only won because it was in the GREAT CRAP OF AMERICA where biased jury memmber's gave a pathetic verdict the reason why i say this is because as mentioned in the article GREEDY APPLE are losing in Euorope and else where so because GREEDY APPLE was an American company the patriotic biased scum jury returned a guilty verdict which i hope get's overturned. Also Samsung were in my opinion wrongly asked to pay around $1 billion to GREEDY APPLE that made GREEDY APPLE very happy but unfortunatly that's been short lived because now SAMSUNG have upped the price of the A6 processor and GREEDY APPLE have no option but to cough up so that mean's that SAMSUNG should probably make close to the $1 billion that they were asked to pay GREEDY APPLE, so that serve's GREEDY APPLE right hahaha i wonder how happy GREEDY APPLE is now, well some one should ask them hahaha. The mere thought of trying to say that a comapany such as GREEDY APPLE own the patent to a rectangle with rounded corner's is absured and like i said before if that case was not in America then GREEDY APPLE would not have had a chance of winning it would have been thrown out . I have absolutaly no sympathy for GREEDY APPLE because they are the one's who stareted all of this GREEDY litigation crap which just stifle's innovatiuon and in the long term will cost the customer more as is the case here but GREEDY APPLE do not care because they now that STUPID ISHEEP will pay a ransome for their OVERPRICED CRAP. I used to be an ISHEEP but luckily i woke up and smelt the coffe as they say and after the GREEDY APPLE and SAMSUNG fiasco i never buy APPLE CRAP again and now most of my freind's do not either because APPLE showed their true colour of being a GREEDY, SCUMY comapny who are shit scared of competition. I hope that SAMSUNG turn the heat up even more hahaha.

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Anonymous Coward

GREEDY APPLE is a CRFTY SNAKE.

It just goes to show that GREEDY APPLE is a CRATY SNAKE it bit the hand that feed's it and now it need's to pay up, good. If some people had sense, moral's and ethic's they would not buy the overpriced crap that GREEDY APPLE make's but unfortunatly there are people who will be iSHEEP'S all of their sad live's i just hope they wake up and realise what a company they are dealing with and i for one am glad that SAMSUNG is turning the screw tight and i hope they torn it tighter. They are tasting their own vile medicine and i bet it don't taste nice, hahaha. COME ON iSHEEP WAKE UP.

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Anonymous Coward

Re: GREEDY APPLE is a CRFTY SNAKE.

"It just goes to show that GREEDY APPLE is a CRATY SNAKE it bit the hand that feed's it and now it need's to pay up, good. If some people had sense, moral's and ethic's they would not buy the overpriced crap that GREEDY APPLE make's but unfortunatly there are people who will be iSHEEP'S all of their sad live's"

Welcome to the fraternal brotherhood of ACs, "Obviously!". We needed a new jizzmopper, anyway.

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Re: GREEDY APPLE is a CRFTY SNAKE.

Don't be too harsh on him, he is after all destitute and unable to afford Apple kit and needs to froth as a result of the rabies.

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Stop

Re: GREEDY APPLE is a CRFTY SNAKE.

I see his meds haven't arrived on time. Again

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Mushroom

Running their own fab

Apple has squat for experience creating hardware in a fab.

The first year's production will be up to the quality of Apple Maps.

By the time they get up to speed, they'll be the greying dry dust of history.

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