Comment by bsullivan01
13 years ago
>>That's why the oft commented, "They should just stop shipping parts to Apple to punish them for the lawsuit!" is kinda ridiculous.
They can't just stop or they'll face bankruptcy by paying Apple damages. No doubt Apple made them sign an ironclad contract...and most likely a few years notice is part of it. Apple isn't stupid.
Not to mention that Samsung isn't doing Apple any favors, they're making a fortune because of the Apple contract. If they decide not to renew it, that's their prerogative but I'm sure Apple has plan A and B ready. Someone else will gladly take their money
I always felt they could take what ever the damages award ended up to be, divide that by the volume of chips they send Apple, And then raise the price per chip that much.
Don't not ship, just make sure that the patent damages don't cause any hit to the bottom line.
I'm pretty sure that Apple would have negotiated prices into the chip contract. After all, this isn't the US signing a cost plus defense contract.
You're assuming the head of the chips department gives a fuck about what is happening to the mobile department. If the CEO where to step in and try to force the chips the people to screw with one of their best customer out of spite I'm pretty sure that wouldn't go down to well.
I always felt they could take what ever the damages award ended up to be
Like the other poster said, prices are almost certainly fixed--or else they'd face extortion as iPhone got more popular--but does anyone even dare calculate how much damages (including punitive) you have to pay Apple that's shipping some 100 million iPhones a year? Samsung and every corporation on earth would be bankrupt, not to mention that their stock would crash the minute word got out, almost certainly face DOJ, EU anti-trust and other issues etc etc.
Samsung singed the contract and they have to abide by it or else...
Not to start a war or anything, but Samsung decided to compete with their customer, not the other way around. Do we already need a reminder of pre-iPhone phones?
At NetApp, when I had visibility into the hardware building side of things we negotiated with Intel (our CPU supplier) on prices pretty much every year, and every time we added a new SKU to the mix. And when it became clear we were going to build systems with AMD parts those negotiations got a lot testier. And I don't doubt for a femptosecond that NetApp ended up having to pay more for their mid-range chips while they were shipping AMD chips in their high end filer.
I have no idea what goes on in the Samsung Microelectronics board room when Apple comes to call, but I would be astonished if the patent suits haven't changed Samsung's willingness to negotiate on price, and the base price they negotiate.
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While you are right, if a supplier is actively working against a customer, it is going to create problems. There are always a million things outside of the contract that matter. If the customer exceeds capacity planning volume, that gets resolved outside of the contract. Most suppliers will bend over backwards to help the customer. Will Samsung? Maybe.
If I were Apple, I'd prefer a supplier that has a natural incentive to be a great supplier rather than one that only has a contractual obligation. In the long term, contracts are as hollow as wedding vows. The relationship between a customer and supplier must be mutually beneficial with aligned interests.
> _if a supplier is actively working against a customer_
Samsung was in the mobile phone business long before Apple. It shipped its first phones in 1998 and was the second-largest manufacturer by 2007.
So Apple already knew it was going to a phone manufacturer, and that it would be competing with one of its suppliers.
I'm sure they'd be exploring alternatives ... But it's just the scale at which Samsung supplies them the chips that it's not seemingly possible for many other suppliers in the world ...
TSMC ships huge volumes, and that is indeed where apples manufacturing is rumored to be going. IIRC they recently signed a huge deal with them too. In this business though a mature process like samsungs 28nm High-K metal gate is quite valuable over a newer one like TSMC's 22nm.