Apple and Samsung are arch-rivals in the mobile market and in the courtroom but they still need each other to do business.
A story from Monday’s Wall Street Journal highlights the co-dependency between the two competitors, pointing out that neither company can truly afford to upset that tenuous fruit cart.
Apple reportedly reached an agreement last month to shift more of its chip production away from Samsung in favor of Taiwan Semiconductor Manufacturing Company (TSMC). The deal was described by DigiTimes as one “whereby TSMC replaces or supplements Samsung, the incumbent supplier of Apple processors.” In recent, years, Apple has also been buying display screens and flash memory from other manufacturers.
However, Samsung will remain Apple’s primary chip supplier through next year, according to a TSMC executive. Why?
Samsung is still the world’s largest provider of the processors, memory chips, and screens that Apple needs for its devices. The two also have a history together in which Samsung has been creating custom chips for the iPhone maker, the Journal noted. That working relationship is difficult to establish elsewhere from scratch.
On its end, Samsung depends on Apple for a hefty chunk of business. Apple is one of Samsung’s largest component customers, and cutting off that supply would dig into Samsung’s earnings.
“If Samsung loses Apple as a client, it will have an impact because Apple represents a large portion” of Samsung’s sales of non-memory chips, Mark Newman, an analyst at Sanford Bernstein in Hong Kong, told the Journal.
At the same time, the relationship between the two has grown dicier. Samsung’s rise in the mobile market has challenged Apple’s once-dominant position. And the two companies have kept the legal system busy by flinging countless lawsuits at each other.
Apple is clearly striving to untether itself more and more from Samsung. But the two seem destined to remain joined at the hip for the foreseeable future.