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Samsung Terminates LCD Contract With Apple 377

Posted by timothy
from the not-after-what-you-said dept.
An anonymous reader writes "Samsung has decided to terminate an ongoing contract with Apple to supply LCD panels for use in its growing range of devices. That means, come next year, there will be no Samsung panels used across the iPad, iPod, iPhone, and Mac range of devices. The reason seems to be two-fold. On the one hand, Apple has been working hard to secure supplies from other manufacturers and therefore decrease its reliance on Samsung. On the other, Apple is well-known for demanding and pushing lower pricing, meaning it just doesn't make business sense anymore for Samsung to keep supplying Apple with displays."
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Samsung Terminates LCD Contract With Apple

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  • Patent disputes (Score:4, Insightful)

    by AbhiTheOne (2717543) on Monday October 22, 2012 @02:35PM (#41731595)
    This clearly seems to be the result of patent disputes...
    • Re:Patent disputes (Score:5, Insightful)

      by Guspaz (556486) on Monday October 22, 2012 @02:37PM (#41731621)

      Or perhaps Samsung was simply not willing to reduce prices as low as Apple's other screen manufacturers like LG were? Or was not willing to commit to the volumes Apple wanted? Or any other many reasons why they might end this kind of supply contract?

      • Re:Patent disputes (Score:5, Interesting)

        by synapse7 (1075571) on Monday October 22, 2012 @02:51PM (#41731769)
        To supply google with 2560x1600 panels for the nexus 10?

        I'm just guessing.
      • Re:Patent disputes (Score:5, Insightful)

        by Anonymous Coward on Monday October 22, 2012 @03:06PM (#41731985)

        Or perhaps Samsung was simply not willing to reduce prices as low as Apple's other screen manufacturers like LG were? Or was not willing to commit to the volumes Apple wanted? Or any other many reasons why they might end this kind of supply contract?

        Give me a break. The gun is still smoking from two of the worlds largest vendors going head to head in a monster legal battle, and we want to sit here and jerk each other off with all the other business theories as to why a contract was terminated between the two?

        Seriously, let's stop bullshitting each other here with answers straight out of the MBA textbook already. After what they just went through, one does not simply kiss and make up.

        We all know damn well why this happened, regardless if anyone will utter a word beyond the golf course.

        • Re: (Score:3, Interesting)

          by NatasRevol (731260)

          It's not that simple.

          Apple has been moving away from relying on Samsung for parts, for over a year now.

          At some point, one of them was going to cut the ties. The patent lawsuit that turned them from frenemies to just plain enemies was probably that point. And after the outcome, Samsung probably wanted to hurt Apple.

          But Apple has been preparing that exit for quite a while now. So it's not too great a hurt.

          • by erroneus (253617)

            To break a contract with them before they had alternatives lined up would have resulted in yet another suit which Samsung may well have lost. I imagine they timed their cut from Apple very carefully to ensure there was a reasonable understanding that Apple could transition to another supplier.

            That said, the current situation plays into Apple's favor. They *LOVE* being 'limited' 'exclusive' 'hard to find' 'highly sought after.' We know this because every new release of every new product starts with an art

        • Re:Patent disputes (Score:5, Interesting)

          by boristdog (133725) on Monday October 22, 2012 @03:43PM (#41732429)

          No, it's more likely economic issues. I work for a semiconductor company and we also stopped doing business with Apple (and some other major names) because they believe they wield such power (because of the huge quantities they order) that they constantly break contracts in order to demand lower prices. We were losing money on every part sold to Apple. Finally, the next time Apple threatened to take their business elsewhere if we didn't lower the price a few more cents per unit, our CEO told them not to let the door hit them on the way out. Since then, our profits have gone up.

          Wal-Mart is the king of this type of supplier mistreatment, but they are certainly not alone.

          • I work for a semiconductor company and we also stopped doing business with Apple... that they constantly break contracts in order to demand lower prices. We were losing money on every part sold to Apple.

            With what results? Have you found other customers who will buy comparable amounts (in aggregate) and pay higher prices? Or did your company's product volume simply decrease?

            • Re:Patent disputes (Score:5, Interesting)

              by boristdog (133725) on Monday October 22, 2012 @04:11PM (#41732801)

              When you can make a profit of $4 a part from 20 smaller customers who together buy say, 10M parts, but you lose $0.05 per part on 100M parts for Apple (or another big supplier-raping customer, there are many - just pick a big name), the choice is pretty easy.

              Since dumping Apple and a few other major customers we gained hundreds of new smaller customers who could never get our inventory before because all the big players were buying it up. We went from a $2.5B gross revenue company that had a loss every quarter to a sub-$1B gross revenue company that has a profit every quarter. And now many of the big players are coming back, hat in hand, to try to get some of our inventory.

              • Re: (Score:3, Insightful)

                by marcosdumay (620877)

                When you can make a profit of $4 a part from 20 smaller customers who together buy say, 10M parts, but you lose $0.05 per part on 100M parts for Apple (or another big supplier-raping customer, there are many - just pick a big name), the choice is pretty easy.

                A semiconductor guy saying that?!? No, the answer is not easy, and any option you choose may banckrupt you.

            • by Anonymous Coward on Monday October 22, 2012 @04:14PM (#41732835)

              I work for a semiconductor company and we also stopped doing business with Apple... that they constantly break contracts in order to demand lower prices. We were losing money on every part sold to Apple.

              With what results? Have you found other customers who will buy comparable amounts (in aggregate) and pay higher prices? Or did your company's product volume simply decrease?

              You just asked if they could make it up on volume when they clearly stated they

              ... were losing money on every part sold to Apple.

              .

              How pointy is your hair?

          • Re: (Score:3, Funny)

            by SuperMooCow (2739821)

            We were losing money on every part sold to Apple.

            Yeah but you were making it up on volume!

          • Re:Patent disputes (Score:5, Insightful)

            by warrigal (780670) on Monday October 22, 2012 @07:04PM (#41734949)
            When I worked for IBM in the '80s there was a policy for suppliers:
            1. We aren't the supplier's sole/major customer.
            2. They aren't our sole/major supplier.
            3. We changed suppliers every few years so there was no risk of dependency building up.
            Also, it doesn't do anyone any good to bankrupt your suppliers. Some competitor could swoop in and buy them out. Their skilled people may leave the industry. They may merge with their competitor and reduce diversity of supply. And so on.
            No sane manufacturer puts his suppliers in jeopardy by forcing them to sell at a loss.
            • Re:Patent disputes (Score:5, Insightful)

              by symbolset (646467) * on Tuesday October 23, 2012 @01:00AM (#41737671) Journal
              IBM takes a longer term view. The young Turks of Silicon Valley don't. They think they will never run out of suppliers to starve. In the short term they are right. In the longer term IBM is right, but in a day when the CxO and Board can't see past the next quarterly report the IBM view is less popular.
        • Re:Patent disputes (Score:4, Interesting)

          by Reverand Dave (1959652) on Monday October 22, 2012 @05:08PM (#41733597)
          You can't say that 100%. Samsung is very compartmentalized. I worked at a semiconductor manufacture and they were our biggest competitor for DRAM and 2nd for Flash, but they still bought tons of chips for their electronics business from us inspite of the fact that their chip business was trying to price us out of the market. It's counter intuitive, but it's how they do, or at least how they did business.
      • Re:Patent disputes (Score:5, Informative)

        by Anubis IV (1279820) on Monday October 22, 2012 @03:36PM (#41732361)

        In fact, it sounds like you may be exactly correct. Another version of the story I read earlier today had this quote:

        “We are unable to supply our flat-screens to Apple with huge price discounts. Samsung has already cut our portion of shipments to Apple and next year we will stop shipping displays,” said a senior Samsung source, asking not to be named, Monday.

        And then went on to say:

        The report claims that Samsung shipped approximately 15 million LCD panels to Apple in the first half of 2012, with the pace falling to 3 million panels in the third quarter and expected to drop to 1.5 million in the fourth quarter as Apple has shifted to other suppliers.

        Long story short, Apple probably made unreasonable demands for price while reducing requested quantities as they shifted to using LG and others, more or less forcing Samsung to terminate the contract. This comes as no real surprise, given the legal battles. Nor is the timing surprising, given that Apple just shifted their chip design (which Samsung had previously collaborated on) to be handled internally, is reportedly moving chip manufacturing from Samsung to TSMC and other companies, and is getting their Flash memory from Toshiba, Micron, and others instead of Samsung, as they used to. If there's something left in the iOS devices that Samsung has a hand in, the smart money would be on it getting moved to a different company as well.

        • Re:Patent disputes (Score:5, Interesting)

          by MrDoh! (71235) on Monday October 22, 2012 @06:12PM (#41734387) Homepage Journal
          All the talk is of Apple going thermonuclear against Android. Looks like the opposing sides are about to get serious. It might be verging on being anti-competitive but there must be some Samsung execs saying "screw 'em, they wanted a war? We'll give them a war. How long can we run at cost on tablets using the components we would have shipped to Apple to make phones/tablets so cheaply Apple will have no sales for the next year". Then we can get back to dealing with people who are fair. The usual rules of business deals appear to have been thrown out of the window by Apple's aggression, now time to reap the seeds they've sown in the tech sector.
    • Re: (Score:2, Insightful)

      by mwvdlee (775178)

      Business is no place for petty grudges.

  • by Fubari (196373) on Monday October 22, 2012 @02:35PM (#41731599)
    From the Fine Article:

    With the ongoing legal action between Samsung and Apple it’s no surprise that the relationship has cooled.

  • by avandesande (143899) on Monday October 22, 2012 @02:35PM (#41731605) Journal
    Curious this wasn't mentioned in the article.
    • by Sable Drakon (831800) on Monday October 22, 2012 @02:52PM (#41731791)
      'Retina Display' is just one of Apple's bullshit marketing terms. Little more than a handy way to convey that they're using higher PPI IPS panels, because the average consumer knows nothing about what PPI or IPS happens to be. It's not a standard.
      • by BrooksMarlin (141819) on Monday October 22, 2012 @02:58PM (#41731873)

        So it's in fact not a bullshit marketing term, but an effective way to convey an idea that consumers wouldn't normally understand.

        • by green1 (322787) on Monday October 22, 2012 @03:10PM (#41732023)

          No, because it is much better to tell people what resolution they get, and what size screen, or such instead of a useless name that means absolutely nothing. The only reason to use such terms is to confuse customers and make it harder to compare your products to the competitions' (of course Apple knows that it's customers don't comparison shop, so they don't really care there)

          • by Applekid (993327) on Monday October 22, 2012 @03:21PM (#41732169)

            Agreed.

            Hardware manufacturer: We have a new 15 inch display at 2880x1800, wanna buy it?
            Consumer: Well, is it a Retina Display (TM)?
            Hardware manufacturer: Well no, that's a brand name owned by Apple. But our display exceeds what they call "Retina Display (TM)" with a PPI of-
            Consumer: Not a Retina Display (TM), clearly inferior. If it was better, it too would be called Retina Display (TM). Not interested.

          • by PNutts (199112)

            My Mom (tm) disagrees.

          • by localman (111171) on Monday October 22, 2012 @03:29PM (#41732269) Homepage

            Telling the average person that their display is 100 ppi or 300 ppi or 600 ppi is not useful unless they happen to know enough about human vision to interpret it. The term "retina display" is a marketing term that means "you won't see pixelation", and that's actually a useful thing to know. I hate when companies use meaningless numbers (i.e. no connection to purpose) to market things. You end up with idiots pushing and buying 600dpi displays because it's "more" even though it's pointless for human vision.

            If you're a techie and you want those numbers for some reason, that's fine. Apple still publishes the resolution and screen size like they always have. But marketing to the common person in a way that is useful to them is not "bullshit".

            • I love it when someone asks me if their computer is fast enough for "X" and I ask "well, what are your computer specs?" only to get "Oh, i have the Inspertron 5001".... that is completely useless information to me.

              Marketing terms that have real world meaning in lieu of a threshold number that it represents might be handy; but not when it's a trademarked term only used by one company. eg: if "retina display" could be used to mean any display over 300ppi then it might be useful, but being an Apple trademar
          • by jo_ham (604554) <joham999NO@SPAMgmail.com> on Monday October 22, 2012 @03:30PM (#41732295)

            Actually, it does mean something. It has a defined meaning, from Apple, presented at the keynote based on a formula relating distance, human visual acuity and the spacing between pixels on the display.

            At the point where the pixels are indistinguishable (by varying either d or h, or a combination of both), the display is termed "Retina".

            This is the actual slide presented by Apple when explaining the terminology ("a" is the viewing angle subtended by the pixel spacing "h" and distance from your eye "d").

            http://www.melamorsicata.it/mela/wp-content/uploads/2012/03/formula-Retina-display.jpg [melamorsicata.it]

            Just because you *think* it's bullshit doesn't mean it actually is. Your ignorance of a fact doesn't make it untrue.

          • by rsborg (111459)

            No, because it is much better to tell people what resolution they get, and what size screen, or such instead of a useless name that means absolutely nothing. The only reason to use such terms is to confuse customers and make it harder to compare your products to the competitions' (of course Apple knows that it's customers don't comparison shop, so they don't really care there)

            IPS QSXGA? WTF does this mean to a normal person? Does this chart [wikipedia.org] really help anyone figure out if a device is useful for them? Really they have no idea, because it's not just the size of the pixels, it's how the UI handles it. Retina, while it may be a bit hyperbolic, is very very accessible to the market, and makes sense out of the alphabet or number soup that is display resolution.

            Retina is a "brand", and a brand is a promise. Many folks like that kind of speak, and don't care to listen to what they

          • by rolfwind (528248)

            Wait, to confuse customers who know nothing? Me thinks you are mad at the wrong party here...

            Apple is doing what's right for them as a company, seeling to people.

            This seems to be yet another case of geeks getting mad they aren't being first and foremost courted in the electronics arena.

          • It's not like Apple doesn't also list the tech specs. They list both inch measurements, resolution, and PPI. See, e.g., http://www.apple.com/ipad/specs/ [apple.com]

        • by wiedzmin (1269816)

          So it's in fact not a bullshit marketing term, but an effective way to convey an idea that consumers wouldn't normally understand.

          "The vertebrate retina (play /rtn/ RET-nuh, pl. retinae, play /rtini/; from Latin rte, meaning "net") is a light-sensitive tissue lining the inner surface of the eye. ", right, totally that definitely makes a lot of sense being applied to a display technology. Very self explanatory.

        • by Gilmoure (18428)

          If only Apples marketing weren't so gosh darn effective. If their marketing sucked, they wouldn't have a stand to leg on. No one would be paying three times as much for second rate hardware that is only half as good as real computer and phone gear but noooooooo, they have to know how to market stuff. Wy don't people just ask slasgdot nerds about what they should buy so they know their stuff was really cool and not just faux cool?

      • So basically it's a brand name for a component. You have to admit 'Retina Display' sounds better than 'highest PPI IPS panel'.

      • by Tough Love (215404) on Monday October 22, 2012 @04:02PM (#41732663)

        'Retina Display' is just one of Apple's bullshit marketing terms.

        Oh no way, it's totally different, you just don't get it. And soon Apple will introduce its revolutionary Eustachion Tube speakers[tm].

    • Re:Retina Displays? (Score:4, Informative)

      by Bill_the_Engineer (772575) on Monday October 22, 2012 @03:15PM (#41732091)

      It was mentioned that LG and Sharp will supply the new displays.

      Personally I'm surprised Apple had allowed Samsung to have so much of the component business for so long. I'm not talking about patent disputes. Instead I refer to the lessons learned from basing your desktop computer manufacturing on a single supplier's (Motorola) ability to produce the components needed.

      It makes good business sense to have alternate suppliers to keep the pricing competitive.

      • by Terrasque (796014)

        It's simple, Samsung was the only kids on the block with that quality and reliability.

        Apple have tried a few times before, but the results have generally been rather bad [cnet.com].

        I seem to recall some similar stories now and then, but right now it's so much Google noise it's hard to find old stories.

        Anyway, seems like other producers have caught up, and are now ready to deliver. Hopefully.

  • This could not possibly have anything to do with Apple's recent legal activities, eh?

  • Hey Apple! (Score:5, Funny)

    by PPH (736903) on Monday October 22, 2012 @02:39PM (#41731637)
  • FUD (Score:4, Interesting)

    by sribe (304414) on Monday October 22, 2012 @02:40PM (#41731665)

    Uhm, Apple has been rapidly reducing their orders to Samsung. Samsung admits as much in the article.

    In other words, this is a (lame) face-saving PR stunt by Samsung. "WE'RE CUTTING OFF APPLE'S SUPPLY OF DISPLAY PANELS (uhm, as soon as Apple stops ordering from us)."

    • Re:FUD (Score:5, Insightful)

      by IamTheRealMike (537420) <mike@plan99.net> on Monday October 22, 2012 @02:48PM (#41731731) Homepage
      It can be both ways. If Samsung made it clear to Apple that they would ship them panels only for as long as the contract required them to, and would then terminate the relationship, obviously Apple is going to reduce the size of their orders as fast as possible because transitioning to an alternative supplier takes time and you need to ensure everything runs smoothly with the new factories, etc.
    • Re: (Score:3, Insightful)

      by Anonymous Coward

      Samsung has provided Apple with heavily discounted prices based on really large volume. Apple has actively been working to find other display providers so as to not purchase from Samsung. Samsung no longer has economic interest to provide Apple with heavily discounted displays since Apple is no longer providing the volume to which Apple negotiated. Samsung is simply telling Apple to finish finding their other suppliers as fast as possible because Samsung is no longer going to stay in an agreement to which A

  • Third Reason: (Score:5, Informative)

    by jesseck (942036) on Monday October 22, 2012 @02:41PM (#41731671)

    On the one hand, Apple has been working hard to secure supplies from other manufacturers and therefore decrease its reliance on Samsung. On the other, Apple is well-known for demanding and pushing lower pricing, meaning it just doesn't make business sense anymore for Samsung to keep supplying Apple with displays."

    On my third hand, Apple and Samsung have been suing the piss out of one another, and that is beginning to strain other business relationships.

    • by sconeu (64226) on Monday October 22, 2012 @02:53PM (#41731805) Homepage Journal

      That's my GRIPPING hand, you insensitive clod!

    • They're gigantic multinational corporations dealing with patent law, not two kids going to prom. Neither executive board should suffer any illusion that the other one is going anywhere anytime soon, or that they are the good guys and the other are the bad guys. Neither should be holding grudges.

      Now, trying to leverage their positions makes more sense "If you don't drop that lawsuit over patents X and Y, we're going to raise the rates on our screens." And if that doesn't work, that obviously could lead
    • On my third hand, Apple and Samsung have been suing the piss out of one another, and that is beginning to strain other business relationships.

      On the fourth hand, I think you're out of hands.

  • It would appear they've been tapering off their shipments of displays for while. This really should not shock anyone, aside from the fact that everyone knows Samsung hates Apple, companies move to where the components are priced where they want them to be all the time. Nothing to see here, move along.

  • Not the whole story (Score:5, Interesting)

    by SilenceBE (1439827) on Monday October 22, 2012 @02:54PM (#41731811)
    Demand from Apple went from 15 million to 1,5 million panels and they are in the process of eliminating Samsung as a supplier completely. They have invested in Toshiba plants [reuters.com] for a reason. There is also an indication that the reason that Foxconn have invested in Sharp had something to do with Apple [businessweek.com]. Although I'm more convinced it has something to do with their IZGO panels then AppleTV.

    That Samsung "terminated" the LCD contract has zero impact as Apple wanted to eliminate them from the process anyway and seeing how steadily demand dropped (1,5 million are peanuts if you take into account how many products have LCD panels) that process was already underway. The only thing here is that Samsung can save a little face.

    So is this pure PR or even damage control. And it is understandable, if a big client like Apple announced it takes it business elsewhere as a company you gonna take a hit.
    • Hey! Don't let logic get in the way of a good 'Roid rage against Apple.
      • Actually, logic does not really get in the way of rage against Apple. Well, most of the time, it does not.

    • by ne0n (884282) on Monday October 22, 2012 @03:25PM (#41732235) Homepage
      I would not say "zero impact" lightly, and other Mac owners agree. Fact is, Samsung makes the best panels Apple offers. As a loser of the 2012 MBA panel lottery myself, it sucks to pay full price and get a clearly inferior machine. There are many threads on this. The worst Apple laptop is the one with an LG panel and Toshiba SSD. The best are those with Samsung parts instead.
  • None of this has anything to do with patent disputes, Samsung tablets, Samsung smartphones, or anything else.

    Because gullible American media people believe any lie they're fed by their Corporate Overlords.

  • by Anonymous Coward on Monday October 22, 2012 @03:02PM (#41731919)

    Samsung displays were actually the only non-defective displays that shipped with the new retina macbooks. Other screens have had huge ghosting issues (I went through 4 laptops before getting a Sammy screen that actual worked right) pretty much fresh off the lot.

    It would be nice if this brought these ridiculous issues out into the light so Apple has to face the fact they completely screwed up the retina launch... of course, we all know that would never happen.

    • Re: (Score:3, Informative)

      by Anonymous Coward

      Samsung displays were actually the only non-defective displays that shipped with the new retina macbooks. Other screens have had huge ghosting issues (I went through 4 laptops before getting a Sammy screen that actual worked right) pretty much fresh off the lot.

      It would be nice if this brought these ridiculous issues out into the light so Apple has to face the fact they completely screwed up the retina launch... of course, we all know that would never happen.

      And yet you keep buying their garbage.

  • by Andy Prough (2730467) on Monday October 22, 2012 @03:03PM (#41731945)
    Samsung delivery drivers can't find where to drop off the monitors when they use the GPS on their iPhones
  • Reason 3: Samsung didn't appreciate being sued by apple?

  • by Daetrin (576516) on Monday October 22, 2012 @03:23PM (#41732209)
    1: Apple and Samsung get involved in lawsuits.
    2: Apple decides to reduce orders from Samsung and order from competitors.
    3: Apple demands lower prices for components.
    4: Samsung decides to reduce the supply available to Apple.

    It sounds like all of those have been gradually happening to a greater and greater degree over time. I don't know which particular item happened first, but once the cycle started it just kept on escalating. The smaller the size of the order by Apple (either in terms of number of components or price per component) the less valuable the contract becomes, and the more Samsung is going to focus on finding alternatives to sell to. The smaller the number of units Samsung makes available to Apple and the less they're willing to budge on price, the more Apple is going to focus on finding alternatives to buy from. The less dependent each of them get on each other, the more the gloves come off in the courtroom. The more lawsuits that get filled, the less comfortable both of them are going to feel about depending on the other to sell/buy components to/from.
    • by Dcnjoe60 (682885)

      1: Apple and Samsung get involved in lawsuits.

      2: Apple decides to reduce orders from Samsung and order from competitors.

      3: Apple demands lower prices for components.

      4: Samsung decides to reduce the supply available to Apple.

      It sounds like all of those have been gradually happening to a greater and greater degree over time. I don't know which particular item happened first, but once the cycle started it just kept on escalating. The smaller the size of the order by Apple (either in terms of number of components or price per component) the less valuable the contract becomes, and the more Samsung is going to focus on finding alternatives to sell to. The smaller the number of units Samsung makes available to Apple and the less they're willing to budge on price, the more Apple is going to focus on finding alternatives to buy from. The less dependent each of them get on each other, the more the gloves come off in the courtroom. The more lawsuits that get filled, the less comfortable both of them are going to feel about depending on the other to sell/buy components to/from.

      Or, Samsung realized that it could use its manufacturing capacity in making screens for Apple to make screens for its own product and those have a much higher profit margin than they got from Apple.

      • by Daetrin (576516)
        So that would be #4. As i said, i have no idea which happened first, i haven't done the research. But if Samsung decided to sell their screens elsewhere instead of to Apple, then of course Apple would start finding replacement manufacturers. And then Apple would have even more reason to sue Samsung (all the same "positive" reasons they had before, but less risk of significantly reducing their supply chain.)
  • by Arancaytar (966377) <arancaytar.ilyaran@gmail.com> on Monday October 22, 2012 @03:43PM (#41732435) Homepage

    And the fact that Apple and Samsung have been at each others' throats in court for years has nothing to do with it.

    To be honest, I'm surprised they still did any business with each other. Generally when one company gets the other's product banned from sale, it tends to put a strain on the relationship. But in the mobile market where everybody is suing everybody else, it's probably hard to keep track.

  • Most contracts have a penalty for early termination, any news on one?

  • That's what happens when you bite the hand that feeds you. Of course Apple will somehow spin this as a positive.

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