Samsung reportedly hits Apple with 20% price increase for iPhone, iPad chips - Page 2

Originally Posted by timetech 
Can apple just have an american made processor where it can create jobs here and have a discount on them

Yes. In fact, they already do. iPhone processors are made here, in Texas, and shipped to China, where they're assembled.

I forget when that started. Maybe with the A4 chip? All subsequent chips have been made here.

Quote:

Originally Posted by acslater017 


They're already made in Austin, Texas, and nobody seems to care or give them credit for it. Their products are already "Designed in California", and nobody cares about that either. :P
All people focus on is final assembly.

And they have roughly 70,000 employees, the vast majority of those in the USA. Yep. So most of the core of their hands-on business happens in the U.S. Apple already designs 'premium' products. If they tried to build those end to end in the USA now while their competitors continued to assemble their products in $1.50/hr China, they couldn't compete at all.

And I wonder… How many American workers do you suppose it would take to assemble 20 million iDevices a month, while maintaining the same quality controls and reliability, and not costing 20 times more to assemble? How long would it take them to find and train enough Americans willing to do that assembly-line factory work? People who would stay with it long-term and be loyal, reliable workers?

And I suppose they could charge $1,000 for a top of the line iPhone, or $1,500 for an iPad… but then, who would buy those instead of a Galaxy S3 or Kindle Fire at less than half the price?

Real-world reality dictates many of the terms…. I think Apple has struck a pretty good balance between domestic management and overseas manufacture...

Quote:

Originally Posted by Chandra69 

Anyway Apple is not going to do any business with SamScum in near future. So, SamSung - sorry - SamScum want to milk now. So, it increased the price. Apple really really really has to buy Yahoo! and a super semiconductor company. These two are the ones Apple is not having on its own.
1. A search engine
2. Chip maker

Says who? You dont work for Apple nor do you know anyone who do (the same goes for myself).

You are only saying those things just to heal your downed ego. Admit it.

In the world of business, no one can go at it alone. You need cooperation. There is not feelings in business, only the bottom line is what counts. No amount of harking and barking will change that fact.

P.S. You see that share price indicator on the top right corner of this page? Expect to see that int he $400's with a lot of red figures in the near future.

Texas Instruments will gladly help.

Maybe they could use Intel. They already buy lots of chips off them anyway, and Intel has the 22nm technology which I don't think anyone else has.

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Originally Posted by GregInPrague   

 

In what way could Samsung benefit from this decision in the long term?

um maybe they start build their own product with those chips and or sell the production capacity to another company under terms that are far more profitable per unit to Samsung perhaps? 

Originally Posted by ascii 
Maybe they could use Intel. They already buy lots of chips off them anyway, and Intel has the 22nm technology which I don't think anyone else has.

The PPW there is horrible, isn't it? Never mind the dozens of other problems that would cause.

If you were Samsung, wouldn't you raise your prices 20% after Apple sued them for violating patents - some of them a little egregious

And Apple is looking at moving production to TSMC.

I would do this if I were Samsung

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Originally Posted by PhilBoogie 

That is good news for the Americans working in that Austin fab, no? That is good for the US economy, no? Personally I don't care if Apple increases the price. We probably have less whiners if they do because less people can afford it.

not sure how that works.  How does that benefit American workers at Samsung in Austin, TX?  The price hikes doesn't mean more jobs or higher wages for those workers. 

Quote:

Originally Posted by malax 

(Assuming this is even true)

 

Uh... no.  It will just increase Apple's incentive to move more business to other suppliers and AWAY from the plant in Texas.  Unless you think Samsung is passing the result of the price increases to the workers.  Yeah right.

From what I recently read, all of 200+K Samsung employees will receive cash bonus as Samsung expects $25B profit this year. 

http://www.inquisitr.com/354318/samsung-reports-7-3-billion-quarterly-profit/

http://nwww.koreaherald.com/view.php?ud=20100126000040

Not sure if there is such cash incentive at Apple. 

Quote:

Originally Posted by tribalogical 

 

You think you understand "how business works…"?

 

Here's what I would do first: I would try like hell to win back their business. Not gouge them out of spite…… 

 

Aside from a few stray rumors, can you demonstrate where Apple has "decided to stop buying" from Samsung? No, you cannot. So if this rumor is true, it speaks quite poorly of Samsung.

 

That aside, Samsung has a pretty long and storied history as a "gangster" company… this is just more of the same from them. Now that they've gotten a ton of extra cash from riding Apple's coattails, they will tug at strings to exert a sense of power. If they sense weakness in Apple, they'll exploit that any way they can. It will be short lived, however. I think that within 24 months, Apple will be shifting production away from Samsung on multiple fronts; CPU fab, flash RAM and displays. 

 

Apple may not cut them out completely, they are in fact a reliable and capable supplier, but they will no longer enjoy first-tier status. Not after putting the screws to Apple like they have. 

 

So to reverse the question: If you were a supplier's top-tier client, buying more from them than any other company, and they ran roughshod on you like this, what would YOU do?

time for a tin-foil hat?

Quote:

Originally Posted by Galbi 

 

 

Says who? You dont work for Apple nor do you know anyone who do (the same goes for myself).

 

You are only saying those things just to heal your downed ego. Admit it.

 

In the world of business, no one can go at it alone. You need cooperation. There is not feelings in business, only the bottom line is what counts. No amount of harking and barking will change that fact.

 

P.S. You see that share price indicator on the top right corner of this page? Expect to see that int he $400's with a lot of red figures in the near future.

Oh Yes! I agree.  You can never run a company being in an island. Yes. I agree also that business needs other collaborations or what so ever.  But, the Apple philosophy to own the core technology also has many many many valid points. 

Citing those valid points... I am telling they should own a search engine and a chip making business.

I cant deny your below statement :D :)

Quote:

Originally Posted by acslater017 


They're already made in Austin, Texas, and nobody seems to care or give them credit for it. Their products are already "Designed in California", and nobody cares about that either. :P
All people focus on is final assembly.

well, because they are not made by Apple?  It's Samsung's made-in-USA chips.  In fact, Samsung's maintained a multi-billion dollar chip manufacturing complex in Austin, Texas for at least two decades now.   It's funny, nobody here thinks Apple should take the blame for Foxconn's labor abuses, yet when it comes to taking credit for employing American workers, or anything made in USA ...   

If apple haven't started this BS patient crap REGARDLESS whose right, biting others' heads is the cause to this messy situation.  Why not be humble?

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Originally Posted by cmvsm 

 

What difference does it make? If Apple experiences a 20% cost increase, its an increase. If they don't raise retails to cover the cost, whatever that cost actually is, then it is absorbed into their profit margin, hence making earnings more difficult to achieve and the stock takes a hit, which seems to be the pattern these days. Apple is already getting pounced upon for their 'inflated' iPad mini retail, so it's unlikely that you would see any significant retail increase, if any. The market won't allow it.

Like I said, no one here has enough information to know if this makes any difference. give you a simple example, say apple pays $10 for the previous chip and pays another $5 for other chips and functional components. Now today they new chip includes the other $5 of chips and functional components and it 20% higher than the old chip so they now are paying $12 not $10 + $5 = $15 the cost of the phone to them is now $3 less, This happens all the time in the SOC market place, the next generation is actually more than the previous but overall cost are less.

So without having the reference a $20% increase is meaningless and the cost increase on one part may be insignificant is the increase allow them to save money elsewhere. 

So Apple now designs their own chips and no longer works with Samsung for design.  Now Samsung only manufactures the chips.  Well no matter if Apple takes their business elsewhere, somebody still has to manufacture the chips and Apple has to pay them.  Unless Apple opens a plant to make the chips themselves.
 

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Originally Posted by tribalogical 

And they have roughly 70,000 employees, the vast majority of those in the USA. Yep. So most of the core of their hands-on business happens in the U.S. Apple already designs 'premium' products. If they tried to build those end to end in the USA now while their competitors continued to assemble their products in $1.50/hr China, they couldn't compete at all.

 

And I wonder… How many American workers do you suppose it would take to assemble 20 million iDevices a month, while maintaining the same quality controls and reliability, and not costing 20 times more to assemble? How long would it take them to find and train enough Americans willing to do that assembly-line factory work? People who would stay with it long-term and be loyal, reliable workers?

 

And I suppose they could charge $1,000 for a top of the line iPhone, or $1,500 for an iPad… but then, who would buy those instead of a Galaxy S3 or Kindle Fire at less than half the price?

 

Real-world reality dictates many of the terms…. I think Apple has struck a pretty good balance between domestic management and overseas manufacture...

Well, the vast majority you speak of work at Apple retail stores making pittance in wages.  Apple's engineering teams don't employee tens of thousands of engineers; Jon Ive's own design group employs only a handful of designers (fewer than a dozen, I believe). 

Nope, that's a complete red herring.  I don't think too many people here think Apple should bring back low-wage, low-skilled menial jobs back to the US (assembly - well, unless you are one of those pro-union raging liberals), but some AI'ers argue that perhaps some of the high tech manufacturing should be done in the US.  That's what developed economies often do - they make advanced machineries and high-tech manufactured goods. Samsung is obviously demonstrating it in Austin, TX.

Originally Posted by Superbass 
Anyways, interesting to see if Apple accepts a cut in their (enormous) margins, or if they'll pass the expense on to customers with the 5s... (if there's a $5-10 price increase you can bet why...)

Obviously they'll be accepting the cut in their nowhere near enormous margins. They're not going to sell the iPhone for $204.

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Originally Posted by tooltalk 

 

Well, the vast majority you speak of work at Apple retail stores making pittance in wages.  Apple's engineering teams don't employee tens of thousands of engineers; Jon Ive's own design group employs only a handful of designers (fewer than a dozen, I believe). 

 

Nope, that's a complete red herring.  I don't think too many people here think Apple should bring back low-wage, low-skilled menial jobs back to the US (assembly - well, unless you are one of those pro-union raging liberals), but some AI'ers argue that perhaps some of the high tech manufacturing should be done in the US.  That's what developed economies often do - they make advanced machineries and high-tech manufactured goods. Samsung is obviously demonstrating it in Austin, TX.

I mainly see outsourcing of things like engineering jobs as an issue. It builds up a supply in another country while stifling the senior talent pool here. There is a lot of arrogance in the US in the idea that somehow other countries are less creative or unable to make a quality product, where outsourcing of jobs requiring considerably higher skill is a long term issue. I mentioned engineers simply because they require a minimum of 4 years of college and an equal amount of field experience to be arguably competent beyond basic tasks.

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Originally Posted by tooltalk 

Seriously, Samsung initiated all the copying of Apple, Samsung's largest customer, and you didn't see this coming?

Fixed it for ya.

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Originally Posted by lilgto64 

um maybe they start build their own product with those chips and or sell the production capacity to another company under terms that are far more profitable per unit to Samsung perhaps? 

 

And which other company sells with the same kind of volume that Apple does? Even Samsung's own mobile phone division, which is growing rapidly, isn't growing fast enough to make up for the losses, which is why Samsung's component sales are down.

Quote:

Originally Posted by eat@me 

If you were Samsung, wouldn't you raise your prices 20% after Apple sued them for violating patents - some of them a little egregious

And Apple is looking at moving production to TSMC.

 

I would do this if I were Samsung

You mean violate the terms of a signed contract? Is that how you think businesses should operate? What other company would trust Samsung if they act like little babies whenever something doesn't go their way?

Apple is very likely paying more per piece to Samsung. But not because Samsung did what the haters want (force Apple to pay more just to try and screw them) but more likely the terms of their contract has a sliding scale which dictates prices based on volume. You buy more you get a better price, you buy less and you don't.

People are just trying to take a clause that's already in a contract and spin it to make it look like Samsung is "sticking it" to Apple.

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Originally Posted by AppleZilla 

Build your own factories, Apple. Build them in America.

 

'American Made' will make you the undisputed king, and would shut Apple hating, foreign company loving Fandroids, the Hell up.

 

 

 

This is such bullshit.  Americans are so stupid to parrot this junk all the time.  

1) "American made" is a negative to most people around the world. 

2) The greatly increased cost will not be liked (even by Americans! go figure!)

3) Labour disputes from over-entitled Americans have to be figured into it as well.  

Far from making it "the king," this would be an incredibly stupid move that would increase the prices of all their goods and make Apple hated around the world.  Try to remember that the US isn't the centre of the Universe and that the majority of Apple's customers are now not located in that country at all.  

Quote:

Originally Posted by Chandra69 

Anyway Apple is not going to do any business with SamScum in near future. So, SamSung - sorry - SamScum want to milk now. So, it increased the price. Apple really really really has to buy Yahoo! and a super semiconductor company. These two are the ones Apple is not having on its own.
1. A search engine
2. Chip maker

Actually, Yahoo does make their own search engine that I know of. 

But yes, you are correct.  They actually might be working on both and we don't know it.

All it takes is to get a internet spider, some decent conceptual search technology which can be licensed or made in-house and then build a data center to index all of the content.  But that takes a serious investment.  But Apple has been upping their R&D money recently. Most people don't know that.

yes, either buying a up to date semiconductor company and turning it into an Apple run fab for internal purposes or just simply buying the equipment, build their own plant and hire the personnel.  Each fab plant can take about 2 years to build and costs at least $1 to $2 billion to buy the equipment/building.

The problem that these semiconductor companies have is that these mfg processes are always changing as the die size and fab methods change.  They can't just close the door one day and open up the next with new equipment, so they have to manage how they update these plants as new equipment and mfg techniques come out.  This is why a lot of smaller companies outsource to guys like Samsung, Yamaha, and others that do the mfg of their various chip designs.

There are a LOT of small semiconductor design companies.  Cirrus, etc. that don't operate their own plants because they simply don't have the volume to keep up with the latest and greatest mfg equipment.

There are about 4 big semiconductor equipment mfg and they are coming out with new equipment to get the die size smaller, new processes, etc. and this equipment is ripping expensive and it takes time to upgrade a plant.  Apple's got the money to do it, it's just a matter of pulling the trigger and doing it.

then they have to figure out if it's worth the headaches involved.

Samsung, is just taking advantage of Apple's situation in finding other mfg to do their mfg so they can get off of Samsung completely.

Personally, they should probably buy Sharp for panels since they have this new IGZO technology which is supposed to be able to get even higher quality resolution panels. 

To get Apple's processors and panels done, they should probably do it themselves, plus it would keep their designs completely secretive from Samsung and others which are suppliers and competitors at the same time.

If Samsung is pulling an price increase and no real reason for it other than to be a$$holes, maybe Apple needs to sue their asses and force them legally to kiss Apple's ass forever.

Samsung has been known for price fixing at least once, and they are going to court over price fixing for monitors.

Quote:

Originally Posted by Superbass 

The only reason Samsung did this is because Apple was purposely leaking the fact that they were looking for a new supplier.
If Samsung knows their time is limited in this capacity, they might as well charge extra.
Apple should have been a bit more low key, signed a deal through 2013 and then dumped Samsung at short notice if they really wanted to switch.
Anyways, interesting to see if Apple accepts a cut in their (enormous) margins, or if they'll pass the expense on to customers with the 5s... (if there's a $5-10 price increase you can bet why...)

Apple can't be low key since there are too many people trying to damage Apple's ability to do what they do because if they are successful, it means others aren't.

Why do you think Apple's been hording cash?  For the heck of it?

They have to have money to invest in places they need to invest in and maybe it's time they did their own mfg of processors and always have a few plants in a state of turned on for production as they build a new plant for the next gen and then they switch back and forth as new mfg processes emerge.

It costs about $3 Billion to build a chip mfg plant to build a type of processor and then millions to keep it running. They have to do their cost analysis to see how feasible it is.

Quote:

Originally Posted by mstone 

I wonder why Samsung decided to build the chip plant in the US anyway when the chips mostly need to be shipped back to Asia for assembly. Seems counterintuitive to me especially since chip manufacturing can be dangerous to worker's health and the environment so the US would be much stricter. Those factors seem like it would cost more to make them here in the US not to mention that US labor, land and taxes are more expensive as well.

Because of the talent it requires to run the plant and maybe because that's where they make the processors and they want the engineers designing them as close to the mfg plant as possible.  Maybe they got some tax breaks as a result to get people off of their back for having their product assembled in China.

Quote:

Originally Posted by mstone 

I wonder why Samsung decided to build the chip plant in the US anyway when the chips mostly need to be shipped back to Asia for assembly. Seems counterintuitive to me especially since chip manufacturing can be dangerous to worker's health and the environment so the US would be much stricter. Those factors seem like it would cost more to make them here in the US not to mention that US labor, land and taxes are more expensive as well.

Plus the chip mfg companies like Applied Materials, etc. are right around the corner and that stuff is big expensive equipment and their technical people to ensure that it is installed and running properly are right around the corner.  

I wonder if helping South Korea in the first place was such a good idea. Maybe the Feds should step in.

This is the way business works...

Say you are a reseller of Apple products (iPad, iPod, iPhone, Mac) like BB, Target or Wal-Mart.  

You sign a "contract" with Apple to buy so many $ of each product per contract period.  

In exchange, Apple supplies the products at a discount.

The higher the product commitment, the higher the discount.

You renegotiate the contract at the end of every period.

For example:

• Target commits to $100 Million worth  of iPad Minis per quarter -- they get a 25% discount
• BestBuy commits to $50 Million worth of iPad Minis per quarter -- they get a 18% discount

It works the same for suppliers that build/resell parts to Apple to manufacture their products.

There are other considerations -- but that's the simple version!

Sounds like Samsung wants to charge Apple money extra to pay the fines they owe them..  Sleazy if you ask me.

Originally Posted by drblank 
I wonder if helping South Korea in the first place was such a good idea. Maybe the Feds should step in.

What are you saying, pull out all of our military protection and tell the North to "have at it"? 

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Originally Posted by Neo42 

 

You don't understand how business works.  If you were supplying a client with massive volumes of product at low profit margin and they decided to stop buying from you, what would YOU do?

Well, I might stop copying their product designs and woo them back.

Windows Tax.

Intel Tax.

Now: Samsung Tax.

Hello Taiwan Semiconductor Manufacturing Corporation!  Hello Sharp!  Hello Toshiba!  Hello Elpida!

"This is Tim..."

Quote:

Originally Posted by ascii 

Maybe they could use Intel. They already buy lots of chips off them anyway, and Intel has the 22nm technology which I don't think anyone else has.

IMHO the biggest loss to Samsung isn't going to be the chips they don't sell but that they used to be an Apple chip research partner. 

You want a foundry that isn't going to give your secrets to a competitor.  A pure fab company vs an IDM is a safer bet...but the number of pure-play foundries with the smaller processes limits options.

I think the only options are TMSC, UMC and Global Foundries.  Both Global Foundries and UMC initially missed the boat on FinFET (tri-gate) and ended up licensing that from IBM for 20nm...or in other words 2014ish.

I doubt Intel will want to fab ARM in Apple quantities anytime soon...their fabs are limited to FPGAs and such.

UMC is interesting though...they're offering to sell 10% equity stake in exchange for fab capacity.  Qualcomm is rumored to be taking them up on that deal but UMC is behind the process curve...and they need to sell equity stake to fully fund their 20nm fab.  With only limited 20nm capacity in the near term if Qualcomm locks in that deal then Apple can't.

UMC's market cap is only $4.62B but is investing $8B into it's 20nm build out.  Still, if you were going to burn $12B *cough*moto*cough* that's probably the way to go...although I dunno what the hell Apple would do with the 40nm and larger fabs.  Sell that and the associated business to TMSC I guess.

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