When Apple first sued Samsung, SemiAccurate likened it to suicide. A year and a half later, Samsung is putting the boot into Apple, and it is doubtful they will be anything more than a fruity shell of their former self when it is done.
When the lawsuit first flew, our initial thoughts and analysis was on the CPU side, mainly because that was a critical component for Apple that had no possibility of a second source fabbing those CPUs. At the time, the Apple Ax chips were based on Samsung cores with a new name etched on the lid. As time went on, Apple moved to making their own uncore, and now is making a full custom core for their iWidgets. Samsung is out of that loop right?
Not really, Samsung still fabs the SoCs, and there is no one else with the capacity to do so. TSMC has taped out Ax devices, but they can’t supply anything near the cutting edge wafer volume that Apple needs. The move to TSMC is not going to end well for Apple, but it is going to happen at 20nm, trust us on this one.
Other than CPUs, what is the problem? How about flash and screens? Samsung is number one in flash for both volume and quality, no one else is close. Apple buys Samsung flash by the acre. Who else can supply Apple with that quality and quantity of flash, not to mention at the same price? No one. Same with screens. Samsung is number one in quality, quantity, and price by equally wide margins. No one else can supply Apple like Samsung does.
If Samsung wants to shut out Apple on any one of these items, it would cripple Apple. Even if they could get a supplier at the same quality, there is no way they could get it at high enough quantities. Then there is the issue of price. Vendors would know Apple’s situation and desperation means price gouging, especially after being screwed by Apple for so long. This isn’t a theoretical scenario, the vendors will get their due if they have a chance, and Apple has their back to the wall.
For now, Samsung is happily making chips for Apple, selling flash to Apple, and making screens that no one else can. Apple is grinning and doing a happy dance after the initial but fragile court win over Samsung. All seemed well in Cupertino, and while there are some attempts at a Plan B, they are not close to replacing Samsung on any of those.
Then came the news today. The Korea Times said that as of next year, Samsung won’t be supplying Apple with screens. This will be spun by both sides as a normal transition, not problems and definitely no disruptions. Bull. This is Samsung putting the boot into Apple pure and simple. It has to be done gracefully, gradually, and subtly to avoid legal scrutiny, or at the very least to have plausible deniability. Samsung has a ready buyer for the screens too, and that would be Samsung. Yes, they make phones and tablets too, and now have a cheaper supplier than Apple for screens. Can you say BoM advantage?
Flash is the next in line, expect that to be transitioned away from Apple before the fruity iThingy company is comfortable with the move. Once again, no one can supply Apple with the quantity, quality, and price that Samsung can. Luckily Samsung has a buyer for this too, it is called Samsung. Nice how that circle closes, eh?
CPUs may be untouchable once Apple moves to TSMC, but there is still time for a toner cartridge to be dropped in the Steve Jobs Memorial Wing of the Samsung fabs. But that probably won’t happen, there are subtler ways. Screens are definitely being used as a weapon now, and flash will likely follow suit because, well, because they can. Where can Apple go? Nowhere. What can Apple do to make nice? At this point not much, Hallmark doesn’t make a card for this particular situation, or at least there isn’t one on their web site. Heck, there isn’t even an applicable category of cards.
In the end, Apple suing Samsung was incredibly stupid and self-destructive. In attacking the Korean giant, they antagonized the supplier of not just one but three critical component categories. To make matters worse, none of the three has a second source that is anything close to Samsung in quantity, quality, and price. By suing, Apple may very well have killed itself, and Samsung’s actions today are proof of that.S|A
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