What with all these patent fights over smartphones between Apple and Samsung it's possible to lose sight of the fact that Samsung is one of Apple's largest suppliers and Apple one of Samsung's largest customers. So while the fight is going on over who gets to be the brand that consumers purchase there's another relationship to think about inside the supply chain.
And it does seem that Apple is moving some of its purchases away from Samsung.
The newswire speculated that the move could be a signal that Apple is looking to diversify its supply chain or pull back its dealings with arch smartphone-rivals.
Samsung manufactures the A5 and A5X processors at the heart of the iPhone 4S and iPads 2 and 3, but the RAM layer in the chip package will no longer be from Samsung, and the NAND flash memory used in iPad, iPhone and iPod will be from elsewhere too.
Instead Apple has increased orders of DRAM chips and NAND flash memory from SK Hynix, Toshiba and Elpida Memory – which are all existing contractors.
And there's more recent news about the screens as well:
Samsung Display – a spin-off business which only began operating separate to Samsung Electronics earlier this year – apparently shipped a record 2.8 million units to Apple in May, but has since seen the number drop in consecutive months to 2.5m and then 1.2m.
The hit to Samsung is good news for local rival LG Display, however, with its orders from Apple increasing from 886,000 in March to 2 million the month after and a whopping 3.83m in August, the report said.
It's worth noting that the "Samsung Group" for want of a better word is a lot less integrated than would perhaps be normal in a North American or European group of such size. Rather than being an integrated firm, or at least attempting to be so, the chaebols of South Korea are connected by common ownership rather than central direction by one set of management. Management operating in different fields are less directed from the centre than they would be inside GE for example.
We also don't know whether this is a deliberate disengagement by Apple or just that other suppliers are currently offering a more attractive deal. But if I were inside Samsung looking at this happening I'd not want to be the guy who greenlighted that $4 billion investment in the plant in Austin Texas right now. You know, the investment in the plant to supply chips to Apple?
