Samsung and Apple Executives Discuss Long-Term Component Supply Relationships
Amid an ever-increasing intellectual property dispute involving Apple's mobile devices and Samsung's Android-based hardware products, rumors have claimed that Apple has been seeking to reduce its reliance on Samsung as the major component supplier for iOS devices. But even if Apple does switch to new suppliers for some components, such as TSMC for future A-series chips, Samsung will almost certainly continue to play a role in Apple's mobile hardware designs.
As reported by Yonhap News, Apple and Samsung are indeed exploring long-term component supply relationships, plans advanced in part by discussions earlier this week between Apple CEO Tim Cook and Samsung Chief Operating Officer Lee Jae-yong.
Lee Jae-yong, chief operating officer (COO) of Samsung Electronics said Wednesday he had discussed long-term parts cooperation arrangements with Apple Inc.'s chief Tim Cook.
The meeting took place Monday after Lee attended a memorial service for Steve Jobs, Apple's late co-founder, and as Samsung and Apple remain locked in fierce legal disputes to control the global smartphone and tablet computer markets.
Lee noted that Samsung and Apple are locked into supply agreements for 2012 and are exploring how to push technology forward through the 2013–2014 timeframe.
Upon arriving at a Seoul airport, Lee, the only son of Samsung Electronics Chairman Lee Kun-hee and heir apparent to South Korea's largest family-owned business group, told reporters his company will continue to sell parts to Apple until 2012. Apple is one of Samsung's most important buyers and single largest semiconductor customer.
"For the 2013-2014 period, we discussed how best to supply even better parts," he said, adding that during the more than two-hour meeting, the businessmen touched on past challenges and how to promote good relations in the future.
Apple has been keen to lock in long-term supply commitments with component suppliers, sometimes prepaying billions of dollars in advance to secure massive supplies looking over several years. Apple's strategy gives it leverage in supply negotiations, helps fend off competitors seeking to source components for their own devices, and results in partnerships to push technology forward.
Lee declined to specifically discuss whether any progress was made Monday on patching up the relationship between the two companies, which are both in the tenuous position of relying on the other in component contracts even as they wage fierce battles in courts around the world. Samsung noted last month that it had been relatively "passive" in the legal dispute out of respect for the company's supply relationship with Apple, but that it would be stepping up its attacks on Apple for "free riding" on Samsung's intellectual property.