Apple ties to Samsung become more apparent even in court clash

“Whatever the jury decides at the end of Apple Inc.’s trial against Samsung Electronics Co., Apple’s deep ties to Samsung are becoming more apparent even as the two companies clash in court,” Ian King and Adam Satariano report for Bloomberg. “As the trial enters its second week, Apple is producing testimony intended to prove that the South Korean company copied patented technology for smartphones and tablet computers… The Cupertino, California-based company seeks $2.5 billion in damages.”
King and Satariano report, “The allegations over intellectual property contrast with the lucrative commercial ties that bind the two companies. Apple’s reliance on Samsung (005930) chips for its best-selling phones and tablets will be worth as much as $7.5 billion to Samsung this year, a 60 percent jump from 2011, Gartner Inc. estimates. Because Apple would struggle to find an alternate supplier for the main processor in its mobile devices, the computer maker can’t quit buying from its competitor anytime soon, whatever the trial’s outcome.”

King and Satariano report, “Apple’s spending has helped arm Samsung with resources to fuel a surging mobile-phone business that’s now the global leader. At a time when there are few other manufacturers able to reliably produce the millions of key chips Apple needs each quarter, switching to an unproven partner could result in parts shortages that might help Samsung grab even more market share. Samsung, meanwhile, would risk losing the business of its biggest customer if Apple were to move elsewhere… Apple accounts for 8.8 percent of Samsung’s revenue, making it the company’s largest customer, according to a Bloomberg supply-chain analysis.”

“There are signs Apple is taking steps away from Samsung. Some of the memory components in the iPhone 4S, which was released last year, come from SK Hynix Inc., said Stuart Robinson, an analyst who studies the smartphone-component industry for Strategy Analytics. New screen technology that will be part of the next version of the iPhone, to be released this year, is being made by LG Display Co., Sharp Corp. and Japan Display KK, according to Sanford Bernstein & Co. research,” King and Satariano report. “‘They are trying to reduce their dependency on Samsung as much as possible,’ Robinson said.”

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