After years of supplying liquid crystal display panels for various Apple devices, Samsung Display, a spin-off from Samsung Electronics, may end partnership next year as the company does not find Apple’s demanded pricing for screens sufficient. Instead, the South Korea-based display maker will sell its products to its parent company or to other makers of smartphones or tablets.
Apple, which buys tens of millions displays per quarter and which is probably among the world’s top consumers of LCD screens, hardly offers pricing that Samsung Display, which is virtually an independent company these days, might want for its products. Moreover, Apple is transitioning towards displays with ultra-high resolution, which are relatively hard to manufacture, which is why Samsung Display needs more money for them. Meanwhile, the per-pixel costs of new displays, such as those used on third-generation iPad, are getting lower, eroding premiums that Samsung Display should receive for better products.
“We are unable to supply our flat-screens to Apple with huge price discounts. Samsung has already cut our portion of shipments to Apple and next year we will stop shipping displays,” said a senior Samsung source, asking not to be named, in a conversation with the Korea Times news-paper.
According to industry sources, Samsung Electronics’ mobile division, Amazon and possibly other clients are increasing their orders for displays used in tablets and smartphones, which should be a sufficient substitute for possible losses from cutting the relationship with Apple.
“Although we are losing Apple business, Samsung looks safe as we found the right alternatives – Amazon and Samsung Electronics’ handset division,” stressed the alleged source with knowledge of Samsung Display plans.
It is interesting to note that Apple is also gradually lowering its reliance on Samsung-manufactured components. For example, the new iPhone 5 smartphone does not use NAND flash memory from Samsung, whereas the upcoming iPad mini utilizes displays from AU Optronics and LG Electronics. In fact, the iPad 3 is also Samsung-free and uses displays from Sharp, LG and Japan Display.
Samsung Display recorded 22.7 trillion KRW (approximately $20 billion) in annual revenue in 2011 as Samsung Electronics’ LCD business The company has 20 000 employees and five production facilities worldwide.
Apple and Samsung did not officially comment on the news-story. From time to time information about forthcoming breaking of ties emerges unofficially when the parties cannot negotiate about pricing.