The Korea Times said on Monday that Samsung Display will terminate its contract with Apple due to financial strain and supply chain issues.
The news is seemingly part of a bigger picture involving the heated legal disputes between Apple and Samsung. Despite the Display division's contract to provide LCD displays to the fruity iPhone maker, both companies are competitors in the same markets. Adding to that, just recently a jury awarded Apple $1.05 billion USD in damages in a patent infringement dispute against Samsung, and the latter South Korean company has since appealed the ruling.
That said, tensions between the two are understandable. Even more, supplying Apple with displays would seem to be a conflict of interest for Samsung as a whole, but for a long time Samsung has served as the key display supplier for Apple's iPhone and iPad. By the end of June, Samsung Display had shipped over 15 million LCDs in 2012 alone, followed by LG Display (12.5 million) and Sharp (2.8 million). Business, it would seem, was good.
But Apple has relied less and less on Samsung Display for its screens since then. During the third quarter, the South Korean company only supplied Apple with less than 3 million displays, and the company expects that number to drop even more in the fourth quarter down to 1.5 million. That just isn't enough business to keep the contract active, or so the Korea Times article insinuated.
In the Korea Times report, unnamed sources claimed that Apple's tight supply chain management structure has had a financial impact on Samsung Display. Apple is reportedly leveraging its influence to get better deals from Samsung's rivals, Sharp and LG. One unnamed senior Samsung source told The Korea Times that the company is unable to follow suit and supply Apple with displays with huge price discounts.
As a sign of the declining contract, Samsung Display was not the LCD provider for Apple's upcoming 7.85-inch iPad Mini. "Although we are losing Apple business, Samsung looks safe as we found the right alternatives — Amazon and Samsung Electronics’ handset division," the Samsung Display source said.
Additional sources have confirmed that both Amazon and Samsung Electronics have increased their orders for displays, making up a portion of the losses caused by Apple's decline. The report suggested that Samsung would cease in providing Apple with displays by next year, but the company will still continue to do business in other areas with Apple including manufacturing the A6 SoC on the 32-nm process.
Shortly after the Korea Times article went live, Samsung stated that the report was 100-percent false. "Samsung Display has never tried to cut the supply for LCD panels to Apple," a spokesperson told CNET. The company is asking the Korea Times to revise its story. Still, is there some truth to the story, or was it 100-percent fabrication? We'll find out next year.
keep on kicking ass with your innovations
Now on this subject, I don't think Apple wanted to pay the increased cost of the displays from the unforseen increase in production costs. The increase was only $1.5 Billion.
samsung displays was spun off by samsung, so the apple lawsuits don't affect them, samsung also doesn't influence them (I hope)
I personally think Samsung should have given Apple the finger at the first lawsuit, and watched their compont supply dry up before the iPhone 5 launch.