Apple Could Pay More For Samsung Microchips In The Future
November 12, 2012

Apple Could Pay More For Samsung Microchips In The Future

Michael Harper for — Your Universe Online

Apple and Samsung may be duking it out across the globe over their designs and patents, but they still have a very close working relationship. That´s because the arm Apple is currently trying to pin down, Samsung Mobile, is different from their supply arm. It´s this second arm which Apple remains linked to, buying memory and mobile processors for their computers and iOS devices.

Today, one South Korean newspaper is saying Samsung will continue to strain this relationship between the world´s top 2 smartphone manufacturers, upping the bill to Apple for its microprocessors.

Although Apple designs these microprocessors (The A5, A5X, A6, and A6X), they send out to Samsung to have them built. These chips are built in Samsung´s plant in Austin, Texas, and according to the newspaper, Apple could be paying as much as 20% more for these chips in the future.

The newspaper, Chosun Ilbo, cites an “unnamed source” familiar with the negotiations, saying: "Samsung Electronics recently asked Apple for a significant price raise in (the mobile processor known as) application processor.” Apple reportedly turned their nose up to the price hike at first, but later gave in and accepted the new price.

This unnamed source has also said Apple has already begun to pay the higher price for their chips. Samsung has a contract to provide these chips to Apple for the next 2 years. Last year, Apple bought nearly 130 million of these chips for their iPads, iPhones and iPod Touch devices. This year, they´ve already purchased more than 200 million, according to the report.

Earlier reports have also suggested that Apple worked alone in designing the new A6 chip whereas they once collaborated with Samsung. According to a report from the Korea Times, Samsung only builds the chip without providing any input on how to design the architecture.

While Apple hasn´t divulged how much they pay for these chips, a recent teardown by IHS iSuppli suggests that the new A6 processor found in the iPhone 5 costs the company $17.50 a piece. By comparison, Samsung charged Apple $15 for the A5 found in last year´s iPhone 4S.

Though this price hike will no doubt tire an already weary relationship, it´s already been suggested that Apple is ready to move away from Samsung when it comes to purchasing the materials for their iDevices.

Last month, the Korea Times cited an unnamed executive with Samsung who claimed they would no longer be supplying the LCD displays for the iPad. As it stands, Apple has already chosen another screen maker for their latest iPad mini. As mentioned by the unnamed executive, the number of displays ordered by Apple has slowly dwindled as the year has moved on.

Samsung later denied this report, saying that the story was “100% false.”

However, with rumors still flying around about Apple switching chip makers, this newest report seems to be more fuel for an ever growing fire of Apple speculation.