Samsung to cease LCD panel production for Apple as margins thin, relationship strains

Daniel Bader

October 22, 2012 3:10 pm

It’s safe to say that this hasn’t been a year of relationship building between Samsung and Apple. Both companies spat venom and unapologetically accused the other of patent infringement. Apple ended up winning its case in the U.S., but the environment is very different in places like Korea, Japan and the U.K., where Apple either lost its infringement cases or had them thrown out.

According to a Korea Times report, Apple and Samsung are severing their LCD panel relationship. In fact, it’s Samsung that’s doing the severing, citing low margins over the high-density new iPad, which costs the Korean company considerably more to produce than the non-Retina parts on previous models. Apple has also sought out new producers such as LG, Sony and Sharp for its LCD panels, leading to lower order numbers from Samsung.

Samsung is said to be making up the lost revenue with huge orders from Amazon, in addition to increasing output for its own products such as the Galaxy Note II and upcoming 300ppi Nexus 10 tablet, which is expected to debut next week. According to the report, while Samsung was still Apple’s top LCD supplier for the first six months of 2012, its output it expected to be reduced to 1.5 million by year’s end.

Despite the drop-off in supply to Apple, Samsung is likely going to have no problem filling the production glut. Its AMOLED displays are among the industry’s most popular displays, and Samsung itself sells more smartphones than any other company. Apple has also reduced its reliance on Samsung for NAND flash memory and other internal components.

Source: The Korea Times
Via: Techcrunch

  • I Like Good Food

    Overall this is not very surprising.

  • MXM4K

    This isn’t surprising in the least. Seems like both companies are better off this way. This also would have probably happened without all the lawsuits due to the cited low margins.

  • sp

    finally.

    way to go Samsung. they dragged your name and company in the mud by stating you copied this and that, while they reaped the benefits of your products inside their own products.

    this will only do well for Samsung in the long run.

  • Kingspec

    Samsung had to cease before Apple realized their panels were Squares with rounded corners…

  • iphoneee

    This is very bad news for samsung. no apple maps for you

  • Brad F

    Didn’t Samsung want to slow/stop production of LCD panels and focus on AMOLED anyway? or was that LG/Sharp/Sony/etc?

    • Tomatoes

      Contrary to what your fellow Apple fanboys think, Samsung is a major supplier for all types of screens and AMOLED displays are just a small portion of their phones and a few TVs that are not ready for release. They won’t concentrate on OLED until it makes sense for their display business.

    • phreezerburn

      Have you even looked at Samsung’s corporate structure in any meaningful way? If global wage initiatives are successful, Samsung will see some bruises but Apple will end up in a wheelchair. So far only the Frand laws have kept the true innovators of the industry from pulling Apple’s plug. Crack a book.

  • Kid.Canada

    Hahaha! Take that Apple and your gigantic ego!!

    • Brad F

      @Kid.Canada Oh no! What is Apple going to do? Give someone else their money?

      Actually, yeah. That’s exactly what they’re going to do.

    • hmmmm

      I knew Brad F would not like to read the truth on this one. :’-( . Is it too hard to admit that Apple is greedy and hypocrite and that they are not even number 1 where it really counts?

    • phreezerburn

      Brad’s head will explode when he learns to read and sees that Apple operates the single largest Hedge Fund in the world.

  • Ron Mexico

    Next up, Samsung will end production of the A6, good luck with that Apple. Maybe get AMD to produce it, lol.

    • GT

      Didn’t you see the news from last week “Apple Hires Key Chip Designer from Samsung”. He also used to work for AMD. Luck not needed.

    • 2dfx

      Yeah considering Apple is now planning to enter the SoC business and develop their own chips in house, they aren’t too concerned.

      Intel however, will need to dig deep and think of how they are going to stay relevant once Apple pulls their plug from their desktops/notebooks.

  • David

    Based on past history, no partnership with Apple ever ended in good terms. This one was just waiting to happen.

  • shaggyskunk

    Let apple eat cake!

    • 45

      I want to eat cake.

  • shaggyskunk

    And apple HAS to apologize for accusing Samsung of copyright infringement in the UK!!! HA, HA, HA

  • hmmmm

    Hey Apple is copying on Samsung, they will now have an iPhone-Sony, an iPhone-Sharp and an iPhone-LG. How will these 3 companies do to offer the SAME phone to everybody….quality control might suffer from this…

    • phreezerburn

      Apple already stole from Sony so they if any are due for some payback.

  • D

    Samsung does not give two s**ts about this. They are smashing everyone right now in the electronics industry. Iphone 5 is already outdated.

    • Brad F

      @D Have you read the Anandtech review/analysis of the iPhone 5? It beats the S3 in just about every way.

    • jonny

      the iphone5 was outdated a year before it was released

    • phreezerburn

      Anand Shimpi sold out years ago and has been an active fanboy for quite some time now. I was one of the first to register with Anandtech’s forums as I was with Tom’s hardware going all the way back to Deja News forums where individuals doing full reviews of gear first surfaced.

      Try Phonedog.com

    • Brad F(anboy)

      @phreezerburn Sold out? All he did was run a crap-load of benchmarks, and the iPhone came out on top.

      It’s like racing cars, and in this case the iPhone was faster. There’s no “selling out” by running benchmarks.

    • Tomatoes

      @brad f fanboy

      There is never anything like fairly racing cars. Cars and tracks can be rigged and scientists can even unknowingly set up their tests in a biased and unobjective manner. That is why the double blind study was created.

      Anand is certainly not blind and can see very very well and chooses his articles and tests accordingly or spins the results to favor the iphone 5.

      I mean it is pretty obvious, especially when he wanted something so badly that he even convinced himself that the A6 were A15 cores. LOL

      But of course, fan boys like you are easy enough to fool.

  • Tomatoes

    This is starting to look like Sony vs Nintendo war. Nintendo(Apple) had the billion dollar war chest and Sony(Samsung) had the sustainable growth. Then Microsoft came in and muddied the waters

    That would be hilarious if Exxon or some huge oil company just entered the mobile industry for fun. It would be especially funny for the Apple fans like Brad F. I personally can’t wait until the day Apple ends up like Nintendo where the only thing they can do is point to their profits that are slowly but surely going to disappear.

    • phreezerburn

      Actually reform in the American patent office to put it in line with every other country on earth would do much more. Only in America can you patent aesthetics and get copyright extensions for 75+ years.

    • Brad F(anboy)

      @Tomatoes “That would be hilarious if Exxon or some huge oil company just entered the mobile industry for fun. It would be especially funny for the Apple fans like Brad F.”

      Yeah, sorry, I’m not seeing the humour.

      Now, if a company like McIntosh decided to make phones, that would be hilarious because we could compare… (wait for it…) Apples to apples.

  • TouchMyBox

    Keep all of your best screens for products that are actually good. :)

  • Sc

    Now apple will make someone else their b***h

  • sp

    has anyone else noticed that every where else in the world except for the USA, that Apple has lost their legal patent wars with Samsung..

    makes you really think that the case in the USA may have been biased….

    things that make you go… HMMMMMMMMMMMM

    • phreezerburn

      Aesthetics patents only exist in America… the land of the Kargashians, pants that don’t fit and a 7 year copyright that spans 75+ years. Here’s one for you, colours are not only copyright material but there have been actual patents on such.

    • bb

      have you also noticed that most of the iphones and iproducts are also sold in the U.S.A. when economic times hit they do support their own companies unfortunately they don’t keep the jobs there.

  • Phox

    This is good news for Samsung. They can charge more to other phone manufacturers for the technology which will put more money in their mobile department thus being able to fund more in research for even better screens in the future!

    On a side note I personally wouldn’t buy an lg Sony or sharp screen whether it’s on a phone or tv.

  • fantard

    LG, Sharp, Sony, Panasonic and others are all lining up to beg to get Apple’s display business. Samsung is hurting themselves more and they know it, which is why they took so long to take this step.

    • Tomatoes

      Yes, of course struggling companies are willing to line up for scraps.

      If Samsung feels that they can make better use of their yields than giving Apple such a great discount, then that is most likely the case.

      If they are not producing millions of iphone and ipad parts, they can charge Amazon more to make up for the loss in quantity sales.

      You can say that they are learning how to milk people like Apple does.

  • fantard

    Remember, Samsung was considered pretty much dogshit in the mobile space until a couple years ago. They can quickly go back to that same spot. Replying on their own possible sales over Apple’s pretty much guaranteed sales doesn’t seem like a good busines decision. But it’s been made so both side will live with it.

    Apple can invest in other companies to help them ramp up. It will hurt for a while, but only until they buy their way out. What is Samsung going to do to guarantee sales? Pay their users? They already rely on essentially a soup kitchen business model, how much less can the sell them for?

  • Schadenfreude

    One can only hope that Apple sues LG, Sony, Sharp and everyone else. *fingers crossed

  • justpassin

    Should make the samsungsyrup.com boys happy :)

  • Sweet

    They’ll probably get LG to pickup the slack, since LG also uses IPS tech in their TVs. Plus, like Samsung, LG is a Korean company, so Apple is assured that their screens will be manufactured Gangnam Style. :-)

    This is less than a bump in the road for both companies. It will be business as usual, and life will go on as usual.

  • freezerburnt

    Hmmmmm…. if things like this keep on happening to Apple, they might actually have to start innovating again. This might actually be a good thing for BOTH companies in the long run. I’d love to see Apple come out with something that isn’t just a slightly modified version of their previous product. I wouldn’t buy it, but it would still be a great thing to happen.

    Now, all Apple has to do is to stop blatantly copying Android features, and all might be well in the world again. ;)

  • gnote

    Great decision Samsung, So long crApple!