Although I had originally thought that these two very large electronics and technology giants could have a “gentleman’s agreement” to get along, over the course of this year it looks like that’s not going to happen. As it’s been mentioned before, Apple is a huge customer of Samsung’s, buying LCD screens, flash memory, DRAM chips, processors, lithium batteries, etc.
Apple wouldn’t have a problem with this if Samsung wasn’t interested in directly competing with them. However, Samsung is interested is making stuff that directly competes with Apple’s core cash cow products such as smartphones, tablets, laptops and smart TV hardware. Some of the products share so much of the “look and feel” of Apple products that they have come out with a lawsuit against Samsung.
So where do we stand now? There is apparent movement by Apple to “decouple” from Samsung. They are talking to alternative suppliers such as Taiwan Semiconductor for chip manufacturing and maybe perhaps Intel as well. They are developing ties with Toshiba to procure high-tech LCD displays. However, decoupling is easier said than done. Witness Apple’s further dependence on Samsung once it was discovered that LG’s displays had light leaks. Plus, it doesn’t appear that Samsung is too worried. Samsung has greatly expanded their Austin, TX chip facility in anticipation of greater demand for their smartphone and tablet chip components. Samsung’s greatest asset right now is that it is not easy to substitute the kind of quantity, quality and price demands that Apple requires from the variety of no name companies that are out there. In many cases, Samsung is [presently] the only game in town.
According to some analysts, Samsung is also developing a strategy to counter Apple in core product categories such as display technologies, wireless technologies, RFID and cloud computing. As I said long ago, for what Samsung cannot do in terms of creating intuitive software interfaces, they are instead pushing their considerable raw engineering firepower to increase the pace of hardware technology development. It appears that Apple understands this and has adjusted their marketing accordingly. It will be an interesting battle, and it’s just getting started.