Apple may have laid a pounding on Samsung in its recent billion dollar court settlement, but things are not always what they seem. Samsung actually makes a lot of money from Apple, since Samsung has some supplier relationships with the company that serve to enhance its bottom line significantly. For one, Samsung is the sole supplier of chips that power the iPhone and iPad. Apple designed the chips, but Samsung makes them.
During an emergency meeting of Samsung executives, hosted by CEO Kwon Oh-hyun, the leader demanded that there be a firewall between its components business and its handheld business. The company, in the meantime, is planning to appeal the $1.05 billion verdict alleging significant copyright infringement.
In addition to the micro processors that it supplies, Samsung also gives Apple various memory chips and flat screens that are used for its products. In fact, 26 percent of the cost of making an iPhone is paid out to Samsung.
“Apple needs Samsung to make the iPhone and iPad. Period. Samsung is the sole supplier of Apple’s processing chips and without Samsung, they can’t make these products,” said James Song, an analyst at KDB Daewoo Securities in Seoul. “Samsung might be considering lots of options to leverage its components business’ importance and pressure Apple, and Apple could be also well aware of this.”
How much does Samsung make from its component sales? $13 billion per year in revenue, with a healthy profit of $2.2 billion dollars. So, how you like them apples?