Samsung’s proposed price hikes for chips could affect Apple margins significantly?
This entry was posted on Wednesday, November 14, 2012.
The long running battle between Apple and Samsung over their quests for dominance in the smartphone and tablet market, along with their messy legal battles, had a lot of industry watchers pondering where these two companies would go next. The irony of their antagonism to each other is the fact that Samsung makes components that comprise of up to 26% of Apple’s iPhones and iPads. They have proved to be the strangest bedfellows in the tech world in quite some time, and it seemed to only be a matter of time before their relations would get frayed with their constant legal wrangling in courts globally. There have been reports that Samsung plans to raise the prices of their chipsets over the last couple of days, and now analysts have started speculating about just how much of an effect such a below the belt response from the Korean electronics giant would have on the Cupertino company. The answer, according to Gene Munster of Piper Jaffray, is a lot.
The Piper Jaffray analyst believes that Apple’s profit margins could dip as much as 1 to 2% if Samsung does actually go ahead with its plans to raise the prices of the chips it supplies to Apple for its myriad iDevices. The rumor is that Samsung wants to hike its processors’ prices by a whopping 20%, and that could be crippling for a company that values profit margins as much as Apple.
For all we know, this could be a quick repartee from Samsung over the recent rumors that Apple would try to move away from its dependence on Samsung for such a large chunk of its hardware. In effect, this may all just be a bit of aggressive posturing from the two enemies, but their currently symbiotic relationship leads us to wonder – would they really be antagonistic enough to snap what has been a hitherto mutually beneficial relationship?