Apple messing with Samsung’s money now
By James • Sep 26th, 2011 • Category: Industry News
- Photo: scriptingnews / Flickr
Is it safe to say that the Apple Samsung patent battle has, officially, bubbled out of control? Irrespective, what can be said with certainty is the longer the legal battle stretches on, the more Samsung’s business is damaged. And this is not only so in terms of its fast-growing tablet PC business, but more specifically in its component supply business, with mounting evidence that Apple has started building supplier relationships elsewhere.
First, the supply side
In fiscal year 2010, Apple was Samsung’s second-biggest buyer, spending some $5.7 billion with the company. The only customer that brought in more money for the Korean consumer electronics giant is Sony. Now, with the Apple Samsung patent battle fast spiraling, there is plenty of evidence that Apple has begun sourcing components from other suppliers for its mega-hit mobile devices.
Irrespective of how fast Samsung is growing in other areas of its business, there’s no easy way to plug up the massive gap in a profit and loss statement a customer that big can leave.
When fighting hurts
HMC Investment Securities Nho Geun-chang says as much, telling Reuters that ‘Samsung’s tablet business will be most affected and its chip business will also take a hit as Apple moves to diversify away from Samsung to the likes of Toshiba.’
He added that: ‘But taking passive steps for fear of losing its biggest customer will slow down strong growth momentum at its telecoms business, which Samsung doesn’t want to see as the business is set to become the biggest earnings generator this year and make up for weakening chip profits. It’ll be a costly battle for Samsung.’
Stuck between a rock and a hard place, since in the end, either Samsung rolls over and lets Apple legally crush its fast-growing mobile business – not an option – or fights an expensive battle against a key customer – not ideal, but seemingly the only viable approach.
It’s a pity, really. The Apple Samsung patent battle sees two of the brightest stars in the mobile business distracted from what they should be doing – innovating and delivering stellar products.
Tags for this article: toshiba, samsung, apple






