Samsung Hits Apple With A 20% Price Hike

[preslove]

TSMC is worth 16.7% of Apple, by market cap. That would have to get lower, and non-PC volumes would have to increase a lot for a take over to make sense.

Bad take overs are just the things that could start Apple's decline.

 

[lothar]

It really depends. If their volume gets to a certain point, eventually building their own fab becomes more cost effective than using someone else's. All of the other fabs obviously make enough money to continue the upgrade cycle, so it's not as though they're only making pennies from Apple and everyone else using the fab.

However, they're way better off dropping several billion up front to pay for a company like TSMC to expand their capacity. They've done it before with screen manufacturers, so I don't see why they couldn't do it in this case either. If they really wanted to switch to some other fab, they could easily front the cash necessary to make that happen.

The problem with that is both Apple and Qualcomm have offered TSMC with $1 billion in cash each for "preferred" access.
TSMC refused both their offers and said they're not interested in giving anyone preferred access.

 

[dagamer34]

The problem with that is both Apple and Qualcomm have offered TSMC with $1 billion in cash each for "preferred" access.
TSMC refused both their offers and said they're not interested in giving anyone preferred access.

So either they don't want the money (silly) or can't guarantee supply (more likely). Plus, they also don't want to piss off their other clients as well.

 

[lothar]

So either they don't want the money (silly) or can't guarantee supply (more likely). Plus, they also don't want to piss off their other clients as well.

The last two options are more likely than the first.

Especially the middle one if you consider the fact that Qualcomm signed a contract with Samsung due to TSMC not making enough chips.
http://www.dailytech.com/Qualcomm+Partners+With+Samsung+for+Chip+Production/article25103.htm

Even if it's not the last two options, TSMC not wanting to take the money is not silly like you claim. Obviously, that money is going to come with strings attached.

 

[Mopetar]

Though TSMC has no interest in VIP access. Both Qualcomm and Apple have asked but got shot down.

They don't even need VIP access. It's just a matter of determining what they need and what can be supplied. If TSMC can't supply it, Apple could offer to front the amount of the agreement so TSMC could increase their production so that existing production and customers are unaffected.

TSMC is worth 16.7% of Apple, by market cap. That would have to get lower, and non-PC volumes would have to increase a lot for a take over to make sense.

Bad take overs are just the things that could start Apple's decline.

Who said anything about a take over?

So either they don't want the money (silly) or can't guarantee supply (more likely). Plus, they also don't want to piss off their other clients as well.

Sounds about right to me.

 

[zoiks]

Seems reasonable. They should be able to charge whatever they want.

 

[WelshBloke]

They don't even need VIP access. It's just a matter of determining what they need and what can be supplied. If TSMC can't supply it, Apple could offer to front the amount of the agreement so TSMC could increase their production so that existing production and customers are unaffected...

I don't think that it's as easy as Apple helping out on production costs to increase supply. If TSMC has no more fab space the only way round it is to build more fabs which takes lots of money and lots of time.

They could offer other customers compensation to allow them to 'jump the queue' though.

 

[iGas]

It turn out that Apple didn't have a fixed price contract with Samsung. Therefore Samsung have the upper hand on this fiasco, and put a squeeze on Apple proverbial anatomy for and additional 20% on the existing contract.

 

[Oyeve]

It turn out that Apple didn't have a fixed price contract with Samsung. Therefore Samsung have the upper hand on this fiasco, and put a squeeze on Apple proverbial anatomy for and additional 20% on the existing contract.

Nice!

 

[KeithP]

According to a Samsung official, the price increase didn't happen.
http://www.thestreet.com/story/11766909/1/apple-investors-can-relax-a-little-bit.html

-KeithP

 

[Oyeve]

According to a Samsung official, the price increase didn't happen.
http://www.thestreet.com/story/11766909/1/apple-investors-can-relax-a-little-bit.html

-KeithP

Hmm, that article made it sound like apple needs samsung more than samsung needs apple. That may actually be the case but each company profits so bleh.

 

[TuxDave]

According to a Samsung official, the price increase didn't happen.
http://www.thestreet.com/story/11766909/1/apple-investors-can-relax-a-little-bit.html

-KeithP

Did you have to ruin all the hype and speculation going on in this thread? I was getting a good laugh out of them.

 

[Cookie Monster]

Good. Samsung doesnt need apple as much as it used to. Let apple create their own fab and charge their user base even more.

Or, apple could go back to IBM.

Apple hates IBM (well jobs did anyway) according to my memory.

 

[Mopetar]

I don't think that it's as easy as Apple helping out on production costs to increase supply. If TSMC has no more fab space the only way round it is to build more fabs which takes lots of money and lots of time.

For a new process, it's certainly not that easy, but once it has matured, new equipment can be purchased and added without too much of a fuss. The biggest roadblock there would be the ability for such necessary equipment to be produced, but with enough money, priority could probably be had there as well.

A new process isn't going to reach maturity much faster than it will. Throwing money at the problem won't get it solved proportionately faster. However, scaling up existing solutions is going to be a lot easier and will see a more proportional gain per dollar spent.

According to a Samsung official, the price increase didn't happen.
http://www.thestreet.com/story/11766909/1/apple-investors-can-relax-a-little-bit.html

Just as much credibility as the original source, so I don't know if we can just dismiss this out of hand any more than we can accept it as true.

Apple hates IBM (well jobs did anyway) according to my memory.

Yeah, back in the late 70's and early 80's they probably did, but after that IBM was almost irrelevant to the PC industry as the landscape had changed so much. Apple found new rivals and eventually switched to using IBM CPUs in their computers. That's business for you.

 

[Aikouka]

Intel? They doesn't manufacture for their competitors(that means no to ARM processors and non-X86 CPUs of any kind)

I wouldn't really call Apple a competitor to Intel in the mobile space. Intel needs to convince Android phone manufacturers and Microsoft to use their Atom processors. Apple's iPhone may compete with the aforementioned, but they don't compete directly with Intel.

However, you can't forget that Apple is one of Intel's customers in the consumer processor space. Maybe Apple could sweeten the deal by ensuring Intel exclusivity for some amount of time. Also consider that Intel recently announced that they are raising the amount of idled fab capacity, I assume that they wouldn't mind being able to change that. Although, I'm not sure how much capacity Apple would need given. That would probably be the inhibiting factor.

 

[Rayb]

I could almost picture AMD and Nvidia owning TSMC with a breach of contract after allowing Apple and Qualcom VIP access.

 

[MagickMan]

Apple has $120B in cash... Samsung is worth ~$160B. Maybe Apple should just execute a hostile takeover? They have the money to do it.

 

[Mopetar]

Apple has $120B in cash... Samsung is worth ~$160B. Maybe Apple should just execute a hostile takeover? They have the money to do it.

To what end?

Sure they'd pick up some nice assets that they'd be able to use, and they could probably sell off some of the parts that they don't need, but at the end of the day it doesn't get them anywhere near $120B in value. If Samsung were to stop selling phones tomorrow, Apple would only pick up a small percentage of their sales, whereas the rest of the industry would pick up the lion's share.

 

[acx]

No one is buying Samsung unless Samsung wants them to. Samsung is entwined too deep into the South Korean economic and political system. It would be like a foreign company initiating a hostile takeover of Lockheed Martin. It's not going to get approved by the politicians.

 

[WelshBloke]

Apple has $120B in cash... Samsung is worth ~$160B. Maybe Apple should just execute a hostile takeover? They have the money to do it.

I thought Samsung had something like $400 billion in assets?

 

[Aikouka]

It would be like a foreign company initiating a hostile takeover of Lockheed Martin. It's not going to get approved by the politicians.

This is a little off-topic, but I think your analogy would have some rather major issues with ITAR as well.

 

[jpeyton]

Apple has $120B in cash... Samsung is worth ~$160B. Maybe Apple should just execute a hostile takeover? They have the money to do it.

And they would acquire a better smartphone portfolio in the process.

Or maybe they'll assimilate the Galaxy line into the Apple fold.

Introducing the new 4.3" Apple Galaxy Note III.

 

[lothar]

Apple has $120B in cash... Samsung is worth ~$160B. Maybe Apple should just execute a hostile takeover? They have the money to do it.

What makes you think such a takeover would be approved by the regulators?

 

[tommo123]

or the korean government

 

[MagickMan]

What makes you think such a takeover would be approved by the regulators?

Why not? Given what the telcoms have gotten away with, anything is possible.