Samsung and Apple are bitter rivals and have battled it out in the marketplace as well as in court. Yet, it is a well-known fact that Samsung make Apple parts.
With all this controversy and competition in a cut-throat industry, why does Samsung make Apple parts?
The fact of the matter is that Samsung, known for building mobile phones, also builds processors. Processors that it supplies to Apple. Indeed, Samsung was expected to provide up to 75% of the chips that Apple needed for their next iPhone.
Money, Money, Money!
The reason Samsung makes Apple parts is simple; it makes Samsung money. In fact, Samsung’s mobile market segment is shrinking and their overall profits for the company are lowering. Samsung is looking to diversify their holding and profits. This diversification includes Device Solutions group, which is a major supplier to Apple. With Samsung Mobile only reporting to be 32.4% of the total profit for Samsung Electronics, it is clear that there is some other money-making giant within this company.
That money-making giant is the Device Solutions group, which accounts for around 63% of Samsung’s profits. That means that Samsung no longer makes most of its profit from mobile phones and accessories. In fact, it makes most of its profit selling chips and semiconductors. For Samsung, selling Apple these products is a major financial boom for the company. With mobile sales continuously shrinking and the average selling price on the decline, Samsung needs as many viable income streams as possible.
You may wonder how, with such animosity between the two companies, the two rivals able to do business together at all. Apple has numerous alternative companies it could use to purchase the chips from. However, they stick with Samsung. This has many people wondering if there is more going on behind the scenes between these two companies. With every device that Apple orders, Samsung gets a chance to generate revenue on more than just their own devices. They also get to generate revenue on the iPhone.
The amount of money Samsung generates per iPhone is no small amount. In fact, with Device Solutions group making up most of Samsung Electronics’ profit, it goes a long way to show the power of two long-time rivals working together. In 2013, Apple spent around 30 billion on just processors alone. Samsung enjoyed a nice chunk of that. While the battles between Apple and Samsung spill out into the media over alleged patent infringements, there is no sign that Apple will stop buying the parts it needs from Samsung.
Why does Samsung Make Apple Parts?
At the end of the day Samsung and Apple are both in business to make money, not friends. So, even though they have their issues they are dedicated to what makes them money. Apple sticks with Samsung because they are capable of supplying them with the large quantities that they require. Samsung is a reliable provider, they stick with them. Samsung is a trustworthy provider because if Apple doesn’t make money – neither will they. Samsung produces integrated circuits, parts for computers, televisions, and many other consumer electronics so why wouldn’t Samsung make Apple parts? After all, they are just parts made by Samsung and distributed to companies who need them – Apple being one of them.