Apple Inc. and Samsung Electronics Co., two of the most profitable companies of 2017, are arguably the biggest contenders in the market. However, interestingly, both companies share a love-hate relationship, wherein the success of Apple’s iPhone X (set to be released on Nov. 3) will positively affect Samsung as well. Samsung is known to supply memory chips and screens to Apple for their important new product. According to a study organized by Counterpoint Technology Market Research, 20 months from Nov. 3, Samsung will probably earn $4 billion more in manufacturing components for Apple’s iPhone X than what it will earn in making parts for its very own Galaxy S8 handset. According to Counterpoint’s analysis, Apple is likely to sell around 130 million units of the new model, which will in turn lead Samsung to earn $110 for each unit.
Also, in the first 20 months of global sales of Galaxy S8, an estimate of 50 million units will be sold; Samsung will approximately earn $202 each from parts such as memory chips and displays. Samsung’s component business is aided by Apple’s orders that resulted in about $195 billion, which is 35% of Samsung’s total revenue of last year.
One can’t help but note the unique and intricate relationship between the two giants. Almost a decade ago, Lee Jae-Yong (Samsung founder’s grandson) negotiated a deal with Steve Jobs (Founder of Apple) to supply flash memory used in iPods. This unique relationship expanded after Apple decided to sell smartphones. With over 200 million units sold every year, Apple is highly dependent on Samsung for parts.
Samsung is one of the leading manufacturers of organic light-emitting diode (OLED) displays used to create screens of the iPhone X. It also makes small-sized memory chips that offer extra capacity for memory. In 2011, the mutually beneficial relationship saw a bitter turn when Apple sued Samsung on allegations of patent infringement with the Galaxy S imitating the iPhone design. Samsung in turn sued Apple with its own set of patent infringement accusations. It has been over six years, and the case is still pending.
In an attempt to minimise the dependence on Samsung for parts and other components, Apple will work towards diversifying its OLED production. In order to do that, it will outsource services to Japan Display Inc., Sharp Corp., etc. According to one of the market researchers, almost 95% of the smartphone arena’s profits are cleaned up by Apple and Samsung. These earnings can be utilized to foster better marketing techniques as well as research and development.