Samsung denies rumors of price increase for Apple chip production - report
Contradicting reports out of the Far East are divided on whether Samsung has actually chosen to increase the price of mobile processors for Apple.
An unnamed Samsung official spoke with Seoul-based newspaper The Hankyoreh to deny earlier claims that the company had forced a 20 percent price hike on Apple, as noted by The Street on Wednesday. That disputes an earlier rumor published on Monday by Korean newspaper Chosun Ilbo.
The official reportedly claimed that Samsung's prices "are set at the beginning of the year and aren't changed easily."
The original, now-disputed report cited an unnamed person allegedly familiar with negotiations between the two companies. But Wednesday's report also does not feature a name or direct quote from the unknown Samsung official.
Whether or not Samsung has raised its prices on Apple, there is a growing rift between the two companies as they compete in the smartphone, computer and tablet spaces, to name a few. While Samsung and Apple are bitter rivals, Samsung is also one of Apple's largest suppliers.
Apple's custom-designed chips found on the iPhone, iPad, iPod touch and Apple TV are built by Samsung at its chip fabrication plant in Austin, Tex. There have been claims that Apple plans to move production away from Samsung to Taiwan Semiconductor Manufacturing Co., but so far Samsung remains the sole supplier of custom ARM-based processors for Apple's mobile devices.
Samsung's Austin, Texas Plant | Source: Samsung
Last week, yet another unsourced report claimed that Samsung was expecting to lose a portion of its future chip orders from Apple. It indicated that the Korean electronics company may put off construction of a new fabrication facility because of the expected decrease in orders.
If Samsung does in fact increase the price it charges Apple for building its mobile processors, the change is expected to reduce the company's overall margins by as much as 2 percentage points, Gene Munster of Piper Jaffray said earlier Wednesday. Munster also said he would not be surprised if a price increase from Samsung turned out to be true, "given the legal tension" between the two companies.
Apple's battle with Samsung has remained heated, even as Apple has reached licensing agreements with other handset makers, such as a newly announced deal with HTC. In comments publicized this week Shin Jong-kyun, the head of Samsung's mobile and IT division, indicated his company doesn't intend to negotiate a settlement with Apple "at all."
The terms of HTC's settlement with Apple are secret, but market watchers have suggested HTC is likely paying Apple between $6 and $8 for each phone it sells. The deal is predicted to pay $280 million to Apple in a year, an amount that Shaw Wu with Sterne Agee said will be "immaterial" to the iPhone maker, which is projected to secure $48 billion in net income in its fiscal year 2013.
An unnamed Samsung official spoke with Seoul-based newspaper The Hankyoreh to deny earlier claims that the company had forced a 20 percent price hike on Apple, as noted by The Street on Wednesday. That disputes an earlier rumor published on Monday by Korean newspaper Chosun Ilbo.
The official reportedly claimed that Samsung's prices "are set at the beginning of the year and aren't changed easily."
The original, now-disputed report cited an unnamed person allegedly familiar with negotiations between the two companies. But Wednesday's report also does not feature a name or direct quote from the unknown Samsung official.
Whether or not Samsung has raised its prices on Apple, there is a growing rift between the two companies as they compete in the smartphone, computer and tablet spaces, to name a few. While Samsung and Apple are bitter rivals, Samsung is also one of Apple's largest suppliers.
Apple's custom-designed chips found on the iPhone, iPad, iPod touch and Apple TV are built by Samsung at its chip fabrication plant in Austin, Tex. There have been claims that Apple plans to move production away from Samsung to Taiwan Semiconductor Manufacturing Co., but so far Samsung remains the sole supplier of custom ARM-based processors for Apple's mobile devices.
Samsung's Austin, Texas Plant | Source: Samsung
Last week, yet another unsourced report claimed that Samsung was expecting to lose a portion of its future chip orders from Apple. It indicated that the Korean electronics company may put off construction of a new fabrication facility because of the expected decrease in orders.
If Samsung does in fact increase the price it charges Apple for building its mobile processors, the change is expected to reduce the company's overall margins by as much as 2 percentage points, Gene Munster of Piper Jaffray said earlier Wednesday. Munster also said he would not be surprised if a price increase from Samsung turned out to be true, "given the legal tension" between the two companies.
Apple's battle with Samsung has remained heated, even as Apple has reached licensing agreements with other handset makers, such as a newly announced deal with HTC. In comments publicized this week Shin Jong-kyun, the head of Samsung's mobile and IT division, indicated his company doesn't intend to negotiate a settlement with Apple "at all."
The terms of HTC's settlement with Apple are secret, but market watchers have suggested HTC is likely paying Apple between $6 and $8 for each phone it sells. The deal is predicted to pay $280 million to Apple in a year, an amount that Shaw Wu with Sterne Agee said will be "immaterial" to the iPhone maker, which is projected to secure $48 billion in net income in its fiscal year 2013.
Comments
So they could be paying 20% more per unit with no price increase.
Quote:
Originally Posted by AppleInsider
Whether or not Samsung has raised its prices on Apple, there is a growing rift between the two companies as they compete in the smartphone, computer and tablet spaces, to name a few. While Samsung and Apple are bitter rivals, Samsung is also one of Apple's largest suppliers, AND...
Apple is one of Samsung's largest industrial design providers.
I just shook my head when I first read the price increase rumors. Didn't even bother to post replies to the wannabe-armchair-accountants and the typical anti-apple brigade.
Last time I checked, companies sign what are called "contracts" with all the pricing built in for a given amount of time. This was no different.
But no, iHaters, trolls, and Fandroid crybabies just itch to get in their 2-cents of whimsical so-called wisdom on why it makes perfect sense.
Idiots. Simple as that, and I rarely use that word to describe someone.
Agreed. Both supporters and detractors of Apple were all too happy to believe the story. One side claiming it's proof of how unscrupulous Samsung is while the other says good for 'em, get their $billion back. Why do members take some rumors as fact and other rumors as ridiculous? I think it all comes down to what you want to believe.
As a long time AAPL shareholder, I've seen this passion play many times before. It always starts at the end of September, but by the middle of December, when the crowds at the Apple Stores make the evening news, suddenly AAPL is once again, the halo stock.
Use these periods of short-seller negativity to add to your position. AAPL's Q1 results will blow away Wall Street.
Quote:
Originally Posted by Gatorguy
Agreed. Both supporters and detractors of Apple were all too happy to believe the story. One side claiming it's proof of how unscrupulous Samsung is while the other says good for 'em, get their $billion back. Why do members take some rumors as fact and other rumors as ridiculous? I think it all comes down to what you want to believe.
Gone are the days of real journalism. To report facts only. This is what I hate about our hyper-connected society now. While such easy access to information is a great thing, it's so incredibly easy for someone to overhear someone sitting at another table about a "what if" thing, misunderstand it, post it somewhere and have it take off like wildfire.
Media outlets (including AppleInsider) should be ashamed for click-whoring. I'm just getting fed up with the direction (downhill) the media is taking everything with having zero concern with the ramifications.
Sad that no penalty can be dropped on folks that post nonsense and have it possibly affect the stock price of any given company. Downright manipulation as far as I'm concerned.
Well said!
Quote:
Originally Posted by sflocal
Media outlets (including AppleInsider) should be ashamed for click-whoring. I'm just getting fed up with the direction (downhill) the media is taking everything with having zero concern with the ramifications.
Somehow I'm sure that this involves Jill Kelly since she is a South Korean honorary consul.
Is HTC selling 35 to 45M smartphones per year?
>Somehow I'm sure that this involves Jill Kelly
You're living dangerously. You know at least _one_ of those women is le femme Nikita and do you really want a visit from one of them late at night?
(Apple products have become so thin they won't stop many projectiles these days!)
Does Samsung want to encourage buyers of their products to pay cash in advance by offering discounts or do they want them to hold on to their cash for 30, 60 or 90 day contract terms?
The simple answer to why the 20% price increase rumour makes as much sense as trucks full of nickels pulling into Cupertino.
The chip division most likely has some say in it's own agenda: Apple is a big customer....
Absolutely. Ask any politician what's in their bag of tricks and they'll pull this one out every time. Tel l'em what they want to hear and they'll believe it no matter what.