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Samsung exec denies price increase on processors supplied to Apple

BusinessNews
by Damon Poeter, 15 Nov 2012News
Samsung exec denies price increase on processors supplied to Apple

A Samsung executive has denied reports that the South Korean tech giant is raising the prices it charges Apple to fabricate A-Series processors for iPhones, iPads, and other mobile devices.

Over the weekend, South Korean daily Chosun Ilbo, citing an unnamed source familiar with negotiations between the two companies, reported that Samsung has increased the price of mobile processors supplied to Apple by 20 per cent. But now another Seoul-based newspaper, the Hankyoreh, has cited an unnamed Samsung exec as saying that processor prices were "set at the beginning of the year and aren't changed easily," according to TheStreet.com.

Samsung remains a major supplier of components for Apple despite an increasingly contentious relationship between the two companies, which for the past year have been engaged in a bitter and costly battle over patent disputes in courtrooms around the world.

For several product cycles, Samsung has been Apple's sole supplier of ARM-based application processors like the 1.3GHz, dual-core A6 chip that powers the new iPhone 5 . The South Korean company has a long-term contract with Apple to supply such processors through 2014.

Samsung has also been a main supplier to Apple of other components like memory and touch screen parts. Recently, however, Apple has reportedly turned to other vendors like Sharp for some of those components as it tries to reduce its dependence on Samsung in its supply chain.

The Chosun Ilbo report claiming a chip price hike by Samsung quoted the source as saying that it had already been put into effect, despite Apple's initial protests.

Even if that rumour proves to be false, as Samsung is apparently claiming, the company's feud with Apple still may be costing both companies a lot more money and missed opportunities than the fines and legal costs accrued in their patent battles in various jurisdictions around the world would indicate.

It was recently reported that Samsung may be delaying the construction of a planned logic fabrication facility as it digests the possibility of losing out on future chip orders from Apple. The company "is likely to put off the construction" of its Line-17 fab in Hwaseong, South Korea, DigiTimes reported last week.

Also last week, a rumour cropped up that Apple may have recently given billions of dollars to financially struggling touchscreen supplier Sharp as part of an effort to avoid having to rely on Samsung for those parts.

Mobile analyst Horace Dediu of Asymco theorised that Apple may just have shovelled over a cool $2 billion (£1.26 billion) to struggling Sharp last quarter to ensure that the supplier, which Apple has tapped to provide the touchscreen displays for its new iPhone 5 in lieu of former supplier Samsung, survived to actually deliver those parts.

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