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October 22, 2012

Samsung Plans to Shut Down LCD Supplies to Apple

By Steve Anderson, Contributing TMCnet Writer

Earlier today, a "senior Samsung source" dropped word to the Korea times that, as of next year, the last strange relationship between Apple (News - Alert) and Samsung would be shut down, and Apple would no longer be receiving LCD panels from Samsung for use in their devices. The decision was said to be over a matter of margins, and that Apple's supply pricing strategies were leaving Samsung (News - Alert) with too little profit at the end of the day. But there may be other reasons afoot here as well.

Samsung and Apple have had a strange sort of relationship for some time now, with both companies suing each other over issues of patents and design, yet Apple regularly found itself buying the parts to build the devices that they in turn accused Samsung of copying from Samsung itself. But now, Samsung is finding that they're getting a lot more in the way of orders from its consumer electronics section, as well as from Amazon, who recently brought out new versions of the Kindle and, of course, the Kindle Fire tablet, which has proven surprisingly popular in recent days.

Image via Shutterstock

However, it wasn't as though Apple didn't see this coming, or possibly had plans to do likewise in reverse to Samsung. Apple had been cutting back on orders to Samsung in September, and was moving its orders fairly rapidly to Sharp and LG. Additionally, Apple had also been changing the way it set up its iPad processors, and looking into new sources for RAM (News - Alert) and NAND flash storage chips, so a case could easily be made that this was less an assertion of Samsung's power in the industry and more a "you can't fire me; I quit!" sort of affair.

Admittedly, this situation is somewhat more likely to hurt Apple than Samsung, at least in the short term; with Samsung getting less and less profit from Apple's purchases, cutting Apple loose isn't a bad idea to help keep the company aloft. Apple, meanwhile, only has a few product lines to its name, so any hiccup in the supply line represents potential big losses for Apple. Apple has, however, already been seen to be working around Samsung with new suppliers, so any losses may be somewhat ameliorated.

However, there were some issues previously when Apple tried to quit Samsung, when Apple discovered that LG and Sharp (News - Alert) couldn't put out the kind and quantity of displays that Apple wanted in the way Samsung could. But there is some evidence that Sharp has recently stepped up its game, and there's further word that suggest Sony is stepping in to supply Apple as well.

Naturally, only time will tell just who is most hurt by this measure, but considering that the split has, essentially, been in the works for some time since the lawsuits started flying, it's a safe bet that both firms have already taken steps to limit any potential fallout. Since Samsung appears to have given Apple plenty of notice--"as of next year" could be anywhere from 10weeks to a year and 10 weeks away--it would seem disruption here will be minimal.

Edited by Brooke Neuman
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