Since Samsung and Apple have been attacking each other through the courts all over the world, many people have wondered why Apple doesn't give up the almost 9 billion dollars annual contracts it has with Samsung. Well, the answer is simple: Samsung makes cheap and good parts, but Apple is already looking for more partners for the production of screens and other components of iDevices. Apple has not yet indicated that it would consider a possible termination of contracts with Samsung, but the Koreans are trying to separate legal problems with the division that produces components for Apple, because the Cupertino company is Samsung's biggest customer.
The clear message from Samsung is that a strict internal firewall between its handset business and its component operations remains intact. While it plans to appeal the US verdict, and a damages bill for $1.05 billion for copying critical features of Apple's popular mobile devices – a sum that could be trebled – Samsung will not want to put at risk its Apple supply contract which is worth billions of dollars. As well as being the only supplier of micro processors for the iPhone and iPad, Samsung also supplies DRAM and NAND-type memory chips and flat screens used in the popular Apple gadgets. Samsung products comprise 26 percent of the component cost of the iPhone, Samsung's lead counsel Charles Verhoeven was quoted as saying in the media.
Practically, the current CEO of Samsung is trying to keep intact the barrier between the mobile division and the one producing components for mobile terminals, this barrier ensuring the existence of the contracts concluded with Apple. Although Americans are looking for new suppliers for iDevice components, for now Samsung remains the most important supplier of microprocessors, RAM memory and storage media. Apple tested the production capacity of the Taiwanese from TSMC, but the low yield rate prevents them from continuing the collaboration with Samsung.
In the future the two companies will go their separate ways if the legal problems continue, but for now Samsung supplies 30% of the components of each iPhone.
