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Samsung Working to Keep Design Dispute Separate from Component Contracts

Yesterday, we pointed to a report from The Korea Times quoting a senior Samsung executive as saying the $1 billion judgment against the firm in its patent and design dispute with Apple was the "worst scenario" for Samsung. Several senior executives were reportedly holding an emergency meeting yesterday to discuss Samsung's next moves in the case.

Reuters now notes that Samsung CEO Kwon Oh-hyun, who took the reins of the company as part of an executive reshuffling in June, was not present at that meeting. According to the report, Kwon's absence was part of Samsung's efforts to compartmentalize the patent and design dispute within the company. While he does serve as CEO, Kwon's primary responsibility is to oversee the company's component business, a division that maintains a close relationship with Apple.
The clear message from Samsung is that a strict internal firewall between its handset business and its components operations remains intact.

While it plans to appeal the U.S. verdict, and a damages bill for $1.05 billion for copying critical features of Apple's popular mobile devices - a sum that could be trebled - Samsung will not want to put at risk its Apple supply contract which is worth billions of dollars.
The report notes that both Samsung and Apple have been seeking to diversify their supply relationships to reduce their reliance on one another, but the two companies remain very close partners on the supply chain side. According to statements by Apple's lawyers during the trial, Samsung parts currently comprise 26% of the component cost of the iPhone, even with Apple taking steps to move contracts for some commodities such as DRAM from Samsung to competitors Elpida and Hynix.

Top Rated Comments

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93 months ago

Well duh, as the supplier to one of the most successful and best selling consumer electronics companies in the world, they'd be stupid to let those contracts go elsewhere.

I think samsung sees themselves as a leading supplier rather than a supplier of a leader.
Rating: 28 Votes
93 months ago
Translation: They both like making money. Go figure :rolleyes:
Rating: 12 Votes
93 months ago
I wonder if Apple can now just say, "Hey, take those million units out of our credit."
Rating: 10 Votes
93 months ago
Well duh, as the supplier to one of the most successful and best selling consumer electronics companies in the world, they'd be stupid to let those contracts go elsewhere.
Rating: 9 Votes
93 months ago
Buy Micron stock while it's cheap.

Rating: 8 Votes
93 months ago
Samsung to Apple:

"We're sorry, but your parts are now going to cost 10x what they did before. We have to pay a huge court award."
Rating: 8 Votes
93 months ago
Apple will be working to move on from getting parts from Samsung as fast as they can. May take a while but I wouldn't be surprised if that's their goal.
Rating: 6 Votes
93 months ago

Apple pays Samsung to design their chips and slap the Apple logo on the processor. Samsung is now paying one [carl sagan] billion for back royalties :D

Just to clarify, Apple designs the chips, and Samsung manufactures them.
Rating: 6 Votes
93 months ago

Why would Apple keep having Samsung design parts for their phones when they know the Handset division will just copy it?

Since Samsung just supplies electronics, and doesn't make Apple device cases or chassis parts, just what do you think they would copy? Obviously not the physical look. Nor the software. Nor even what the device is, exactly.

The most they could figure out is say, that Apple was about to make a 3.5" something because of a huge display order. But then, that info would get out from other factories anyway.

Off topic: but apple's biggest mistake was the exclusivity deal with ATT. It forced Verizon/Tmobile/Sprint to use Android handsets as that was the only answer to the iPhone. And of course it allowed google to gain market traction. If the iPhone was available on all the carriers within 1 year, you would not see this level of Android penetration.

Total agreement. Longterm AT&T exclusivity has to go down as one of the worst business decisions ever.

Oh and having Google on your board of directors wasn't a great idea either. He just took notes and ran back to Google and created Android in 1 year.

This oft-repeated fanboy claim makes no sense.

Schmidt didn't start attending board meetings until Sept 2006. Even if he was shown the iPhone under development (and Jobs himself said it wasn't a viable product as late as Thanksgiving 2006), the most it could possibly have given Google is about three months heads up before the iPhone was publicly shown to everyone at the beginning of 2007.

Over the past five years, a few months is nothing.

As if Google was in the phone business before the iPhone came out... Lots of mistakes...

Google was already planning to be in the phone business. They bought Android back in 2005.
Rating: 6 Votes
93 months ago

Samsung's profits in the last year were I believe somewhere in the 4.5 Billion off of something like 50 million in revenue.

yes 1 billion hurts.

Shut down and sell assets? not likely

Don't take this the wrong way, your numbers are a bit wonky.

To put it simply, revenue is how much you bring in. Profit is how much of that, you get to keep, after you subtract all your expenses.

It's like saying, I earned 100 dollars, however, after subtracting all my expenses, I got to keep $1,000,000,000 out of the $100.
Rating: 5 Votes

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