Apple Reduces Memory Order From Samsung
September 7, 2012

Will The First iPhone 5’s Ship Without Samsung Memory?

Michael Harper for — Your Universe Online

According to a recent Reuters report, Apple reduced their memory chip order from Samsung, their top competitor and best Frenemy.

Citing a Source Familiar With the Matter, Reuters is saying Apple is now trying to diversify their supply chain by shopping for memory chips, microprocessors, flat screens and DRAM and NAND RAM chips elsewhere for their line of iOS devices. Apple hasn´t completely stopped shopping at South Korea´s Samsung altogether, but according to the Reuters source, they´re at least looking for other options.

In fact, early adopters of the new iPhone 5, which will be announced Wednesday, September 12, could arrive without any Samsung memory, according to the Korea Economic Daily. The KED also has their own unnamed source who has said these early iPhones could arrive with Japanese chips from Toshiba Corp and Elpida Memory as well as Korea´s own SK Hynix.

“Samsung is still in the list of initial memory chip suppliers (for new iPhones). But Apple orders have been trending down and Samsung is making up for the reduced order from others, notably Samsung´s handset business,” said the Reuters source.

With a global patent war raging between these two companies, it´s hard not to make assumptions about why Apple is making these new changes to their supply chain. The Reuters source is denying these claims, however, saying Apple had already been shopping around for new chip makers and is only now sending in orders.

One analyst takes a shot at explaining Apple´s move, telling the Wall Street Journal, “Apple started to lessen its dependence on Samsung for components since the latter half of last year when the two were fighting to win the spot for the world's largest provider of smartphones.”

Though the wheels have already been set in spin to send Apple looking elsewhere for their RAM, Park also tells the Journal the recent court cases certainly didn´t help the matter.

“Apple's move to diversify its component vendors likely accelerated since early this year when the Apple-Samsung patent litigation escalated.”

Though most recently known for their courtroom antics and large screen, stylus friendly phones and tablets, Samsung also makes a nice living as the world´s largest chip supplier by revenue, according to ZDNET.

Apple is Samsung´s largest customer, contributing up to 9% of their revenue. With Apple hunting elsewhere for DRAM and NAND, they´ll likely contribute 3% to Samsung´s earnings per share this year. By comparison, Apple´s business contributed 4% of per share earnings last year.

Reuters´ sources are also saying Samsung isn´t going to feel this pinch too acutely. As it turns out, Samsung has a hit on their hands with the Samsung Galaxy S III and have recently launched a new Note II  “phablet” and even a Note 10.1 tablet.

Whereas Apple may have pulled some of their business from Samsung, the company may be able to make up for it with their own products, a handy little way to make up for the lost revenue.

Apple plans to announce and reveal their latest iPhone, which is expected to finally offer a redesign and 4G connectivity, next Wednesday. Shortly following previous product releases, Apple has struggled to keep up with demand, blaming parts manufacturers – such as Samsung – for not being able to build screens and memory fast enough.

As more and more people continue to clamor for new Apple goodness, it´s likely Apple is either spreading out their supply chain in an effort to have access to each part and reduce shortages, or simply to gradually shift their weight onto their new suppliers before signing exclusive contracts.