Samsung plans to terminate LCD supply contract with Apple

Posted:
in General Discussion edited January 2014
Starting next year, Samsung will no longer supply LCD screens to Apple, as the rift between the rival technology companies continues to widen.

Samsung announced on Monday that it would terminate the existing contract with Apple and will no longer ship liquid crystal display panels, ending a longtime partnership between the two companies, The Korea Times reported on Monday. Citing an unnamed Samsung official, the report revealed that Samsung has already cut its portion of shipments to Apple, and beginning in 2013 it will stop shipping LCDs to Apple entirely.

The Korean electronics maker apparently plans to offset the loss of Apple as a customer by selling more displays to its own handset division, as well as retailer Amazon, which sells the Kindle Fire HD tablet.

The change will represent a major shakeup in Apple's supply chain, as the iPad maker bought more than 15 million LCDs from Samsung in the first six months of 2012. That made Samsung the largest LCD supplier to Apple, topping LG Display's 12.5 million screens and Sharp's 2.8 million.

Retina Display


However, Samsung reportedly shipped less than 3 million LCDs to Apple in the third quarter of 2012. In the current fourth quarter, Samsung's shipments are expected to drop to just 1.5 million.

Earlier this year, Samsung was said to be the only company that could produce high-resolution Retina displays for Apple's third-generation iPad. While Samsung was the only Retina display provider at the device's launch, LG and Sharp eventually joined in Apple's supply chain.

The relationship between Samsung and Apple has been unique, as the two companies are fierce competitors while Samsung has also been the largest supplier of components to Apple. Tensions between the companies boiled over last year, when Apple sued Samsung and accused the company of copying the look and feel of the iPhone and iPad. Since then, the number of lawsuits has proliferated across the globe.

Samsung's apparent plans to cease shipping LCD screens to Apple comes soon after a rumor indicated that Apple has become more "serious" about moving chip production away from Samsung. The custom chips found in Apple's iPhone, iPad and iPod touch are built by Samsung in Texas, but Apple plans to move production away from Samsung, potentially handing chipmaking responsibilities over to Taiwan Semiconductor Manufacturing Co.
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Comments

  • Reply 1 of 169
    john.bjohn.b Posts: 2,717member

    Quote:

    Originally Posted by AppleInsider View Post



    However, Samsung reportedly shipped less than 3 million LCDs to Apple in the third quarter of 2012. In the current fourth quarter, Samsung's shipments are expected to drop to just 1.5 million.

    Earlier this year, Samsung was said to be the only company that could produce high-resolution Retina displays for Apple's third-generation iPad. While Samsung was the only Retina display provider at the device's launch, LG and Sharp eventually joined in Apple's supply chain.


     


    I'm sure Sharp and LG send their thanks.

  • Reply 2 of 169
    haarhaar Posts: 563member
    good luck SAMSUNG, that might be the worst mistake you have made...
  • Reply 3 of 169
    mauszmausz Posts: 243member


    As the biggest threat to Apple, who sells 100% of what they can manufacture, is not being able to manufacture in great numbers, I would say this is not only bad for Samsung.

  • Reply 4 of 169

    Quote:

    Originally Posted by John.B View Post


     


    I'm sure Sharp and LG send their thanks.



    However the consumer won't, Sharp and LG have been riddled with quality issues. There still are issues with LG's Retina display for the macbook. Samsung's have none. Every launch they've been there to pick up the slack. I'm all for getting away but it will be very interesting to see launches go moving forward. 

  • Reply 5 of 169
    sricesrice Posts: 114member


    "I'm Fired?!  Well I Quit!"   LOL

  • Reply 6 of 169


    I am absolutely stunned they would do this.  I mean, it's not as if Apple has done anything to them.  

  • Reply 7 of 169
    oflifeoflife Posts: 120member
    Just as Apple have purchased a few companies to give them control over the design and fabrication of their CPUs, so they may have to purchase or take a controlling stake in a display vendor - and LG, whose handset division is having a hard time being taken seriously today, may be ideal. LG could also embed iOS into their TVs.

    With flexible displays the next big thing, and Samsung already way ahead on this, if Apple are unable to source such technology, they must produce it using any 3rd party IP or their own ideas that don't breach any of Samsung's display patents.
  • Reply 8 of 169
    freerangefreerange Posts: 1,585member
    Screw Samsung. I'd rather my stock took a short term hit because of supply issues rather than apple pay these scumbags another dime!
  • Reply 9 of 169
    rayzrayz Posts: 814member

    Quote:

    Originally Posted by AppleInsider View Post





    Samsung's apparent plans to cease shipping LCD screens to Apple comes soon after a rumor indicated that Apple has become more "serious" about moving chip production away from Samsung. The custom chips found in Apple's iPhone, iPad and iPod touch are built by Samsung in Texas, but Apple plans to move production away from Samsung, potentially handing chipmaking responsibilities over to Taiwan Semiconductor Manufacturing Co.


     


    So, in response to Apple changing to a different chip supplier, Samsung drops Apple screen supplies?


     


    The cost of saving face, I guess.

  • Reply 10 of 169
    gazoobeegazoobee Posts: 3,754member
    This sounds like sour grapes to me. By the description, Apple has already moved most of their business away from Samsung. Seems like Samsung is just slamming the door and yelling about it after the fact.
  • Reply 11 of 169
    mjtomlinmjtomlin Posts: 1,823member

    Quote:

    Originally Posted by Rayz View Post


     


    So, in response to Apple changing to a different chip supplier, Samsung drops Apple screen supplies?


     


    The cost of saving face, I guess.



     


    Actually Apple has been moving orders away from Samsung throughout the year; from some 15 million down to just over 1 million. By Q1 2013, all their LCDs will be from other suppliers. Samsung "terminating" some contract they had with Apple is moot. Long term, this hurts Samsung more than Apple; they are losing their biggest customer.

  • Reply 12 of 169


    I hope Apple takes a dump all over Samsung.  Apple practically jump-starts Samsung's mobile business and Apple gets back-stabbed for its pains.  I just hope that Apple is able to get the quality and production rates from other companies when it comes to displays.  I guess Samsung is very happy that its mobile business is doing so well and they don't need Apple's business anymore.

  • Reply 13 of 169
    tulkastulkas Posts: 3,742member


    So much for the "firewall".

  • Reply 14 of 169
    I guess this set ups Apple to begin the final stages of producing the TV we've all been waiting for. I'm sure the AppleTV will give Samsung a run for their money. And since they're in this divorce, copying will not be an option for Samsung.
  • Reply 15 of 169
    tulkastulkas Posts: 3,742member


    Didn't Panasonic announce they were getting out of the TV business with hopes of landing Apple as a customer for displays? Between them, LG, Sharp, and perhaps Sony, I don't think Apple is going to be hurt by this much.


     


    Samsung is definitely cutting it's nose to spite it's face. Not a good strategy. The Android market is fickle. While Samsung owns them now, any one of the other vendors could become ascendent at any time. By putting all their eggs in one basket, that being to offset the loss of Apple by supplying more to their own mobile division, is a risky gamble at best.

  • Reply 16 of 169
    How about Apple get the knowhow and build it's own foundries? They have the money, and it would insulate them from third parties competing directly, or infringing on Apple's ip like Samsung has done among its subsidiary companies. I'm sure this would not happen overnight though, and it's a very expensive proposition. Having to source the raw materials, the very expensive tooling required to etch the silicon, not to mention all the electricity Apple would require, and that they probably won't be able to source entirely from green technologies.
  • Reply 17 of 169

    Quote:

    Originally Posted by Constable Odo View Post


    I hope Apple takes a dump all over Samsung.  Apple practically jump-starts Samsung's mobile business and Apple gets back-stabbed for its pains.  I just hope that Apple is able to get the quality and production rates from other companies when it comes to displays.  I guess Samsung is very happy that its mobile business is doing so well and they don't need Apple's business anymore.



    It's a fickle market unless you have an insanely loyal user base such that apple enjoys.


    Samsung could get knocked off the top spot in the Android market at any moment, when that happens they will regret making enemies with Apple.

  • Reply 18 of 169

    Quote:

    Originally Posted by Tulkas View Post


    Didn't Panasonic announce they were getting out of the TV business with hopes of landing Apple as a customer for displays? Between them, LG, Sharp, and perhaps Sony, I don't think Apple is going to be hurt by this much.


     


    Samsung is definitely cutting it's nose to spite it's face. Not a good strategy. The Android market is fickle. While Samsung owns them now, any one of the other vendors could become ascendent at any time. By putting all their eggs in one basket, that being to offset the loss of Apple by supplying more to their own mobile division, is a risky gamble at best.



     


    I think the Panasonic rumor was caused by someone getting their story wrong. Apple is actually going to buy Panasonic.

  • Reply 19 of 169
    gary54gary54 Posts: 169member


    *gasps* I'm just ..... shocked beyond belief.

  • Reply 20 of 169
    I think this isn't quite what it seems, at least based on some of the comments. Everyone knows Apple is moving away from Samsung as a supplier, and LCD screens are no exception, which appears to be supported by the numbers provided in the article. So I believe Sammy is trying to spin this as a choice they made rather than what it is, which is Apple will stop using Samsung as an LCD supplier in 2013. Apple made a huge investment in Samsung's LCD production last decade and it can be argued that Samsung's current standing in the LCD market was directly related to that investment. With Apple now shifting cash to other LCD manufacturers, it's likely these companies will grow quickly to meet Apple's supply requirements. This likely means new and/or retooled existing plants that will also likely produce LCDs for other customers. This is very bad for Samsung as they've not only lost one of it's biggest clients, but they will now need to slow production and possibly close existing plants - Amazon, etc simply do not sell the volume of tables to replace the lost Apple represents. Apple has a long and clear history of leaving suppliers it believes have slighted them and Samsung's management should have anticipated this.
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