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MEGATech Biz: Apple Pushing Forward Without Samsung

Recent rumors indicate that Apple has started working with their vendors to manufacture development and engineering samples of the iPad 3 for testing purposes – everyone except Samsung that is. Current iDevices include a lot of major components from Samsung, including Apple’s Ax processors, FLASH, DRAM, and even LCDs.

However, the recent legal row between Apple and Samsung on the product side of the business will hit Samsung where it hurts on the component side of the business. Estimates indicate that upwards of 25% of Samsung’s component business is Apple derived. The loss of this business will have far reaching effects for Samsung’s financial outlook for years to come.

The first business to be hit will be the LCD business. Both Samsung and LG were rumored to be supplying the next generation 9.7″ HD display for the iPad 3. However, recent whispers from within the industry indicate that Apple has chosen to move ahead with LG as the main LCD supplier for the iPad 3 Retina Display.

The next to go from Apple’s shiny iDevices will be FLASH and DRAM as these are basically commodity items, easily replaced by switching to other vendors. While demand for FLASH is strong globally, demand for DRAM has been weak, with all the major suppliers cutting costs to fill capacity. Samsung is worst hit as they supply over 50% of the world’s DRAM. With excess DRAM manufacturing capacity being forecast over the next few years, and a generally weak PC market, Samsung will be hard pressed to fill the hole once occupied by Apple.

On the processor side, Samsung gets some breathing room as they are the current supplier for the A4 and A5 processors currently going into the iPhone 4 and iPad 2 respectively. The quad-core A6 rumored to power the iPad 3 is also coming from Samsung, but there have already been rumors that A6 manufacturing will eventually be moved to TSMC in Taiwan.

The A4 will last another product cycle into 2012 as Apple creates a low-end iPhone for the masses. The iPhone 5 and whatever forecast is left of the iPad 2 will continue to use the A5 chip into 2012 also. But it’s clear that Apple will accelerate their move away from Samsung and transition their products to the A6 and beyond. By 2013 at the earliest, Samsung may find themselves completely outed by Apple.

This lends new weight to the old adage, “If you can’t beat ’em, join ’em.” Seems Samsung would have been a lot better off not so aggressively pushing into the consumer tablet space and placing themselves on Apple’s iRadar.


Source: Redmond Pie

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