According to sources, Apple has reduced its memory chip orders from Samsung, which is the company’s main supplier as well as competitor. Apple uses Samsung’s memory hardware for the iPhone, iPod and iPad and also relies on the Korean giant for manufacturing microprocessors and flat screens as well. Apple has apparently been reducing its orders to Samsung in an effort to diversify its supply chain but the Korean conglomerate is going to be one of the initial suppliers for the new iPhone.
The new iPhone is expected to be announced next Wednesday, the 12th of September and though Samsung is on the initial suppliers, the numbers have fallen according to the source. Samsung has made up for the lost figures through supplying for its handset business while Apple has included Toshiba, Elpida and SK Hynix to manufacture its DRAM and NAND chips. Lately, Samsung’s handset business has boomed to new heights and accounts for around two-thirds of the company’s profits. This has in turn benefited the company’s other wings such as the microprocessor fabrication unit.
It is a well known trend that when Apple releases a new product, there is a shortfall in supply because of the overwhelming demand. Elpida is already committing more than half of the DRAM chips it produces to Apple. For batteries, the Cupertino, California company is looking at Amperex Technology in China and Panasonic from Japan. Previously, Samsung used to produce batteries too but it has been dropped from the initial supplier list this time. Apple might have to rely on Samsung for displays as one of its core suppliers, Sharp has fallen behind schedule and LG, another dominant supplier is under a heavy load right now.
The relationship between Apple and Samsung is quite complex as the latter produces the chips designed by the former for its high end devices. Though the two companies are involved in serious legal battles in around 10 countries across the world, it appears that their business interests are too large to put at stake. Though Apple has just won a $1.05 billion victory against Samsung, it will not mean much if it is going to jeopardize their partnership for hardware development. With the imminent release of the iPhone, shares of all of Apple’s suppliers have risen significantly over the past week and Samsung is expected to generate $13 billion in revenues from component sales.
