Samsung Electronics has requested a 20 percent price increase for mobile processors being sold to Apple, Inc. according to a report published in Korean newspaper Chous Ilbo.
According to a source close to the situation:
“Samsung Electronics recently asked Apple for a significant price raise in (the mobile processor known as) application processor.”
Noting that the price increases have already gone into effect, the insider stated:
“Apple first disapproved it, but finding no replacement supplier, it accepted the (increase.)”
While Apple uses a custom A-series chip of its own for iPhones and iPads, those chipsets are based off ARM templates which are manufactured by Samsung.
Apple and Samsung currently have a supply contract that runs through 2014. Even if Apple is not happy with the terms of its agreement, the company could be stuck with Samsung for the foreseeable future. At this time, Samsung is the only company with the large scale production facilities required to fulfill Apple chipset orders.
The price increase by Samsung could be a result of the company’s recent $1.05 billion patent loss to Apple. Samsung has also pulled itself out of Apple’s display market space, citing stringent guidelines by Apple that ate into the company’s profit center.
With Apple continually attacking Samsung in court, there is the chance that more price increases could be on the way. Samsung is under no obligation to maintain a certain price ceiling with Apple.
Do you think Apple will continue to pay higher prices for competitor goods as it maintains its strong patent filing stance?