Samsung Electronics, which manufactures Apple-designed chips for iPads and iPhones exclusively at its Austin, Texas facility, has reportedly hit the iPhone maker with a material 20 percent price hike. Unsurprisingly, per an unnamed person allegedly familiar with negotiations between the two companies, this price increase is only aimed at Apple and not other Samsung clients. Apple up until recently used to account for as much as 8.8 percent of Samsung’s revenue. It’s been estimated that Apple ordered 130 million iPhone and iPad chips  from Samsung Electronics in 2011 and more than 200 million units this year. The two frenemies have allegedly started to reflect the new supply price recently…

MarketWatch relays a report from Korean newspaper Chosun Ilbo that Samsung Electronics has a long-term contract to supply chips to Apple until 2014.

Samsung Electronics recently asked Apple for a significant price raise in (the mobile processor known as) application processor. Apple first disapproved it, but finding no replacement supplier, it accepted the increase.

The 200 million units of processors for iPhones and iPads in 2012 multiplied by an estimated $20+ in the per-chip cost pegs Samsung Electronics’s biz with Apple at about $4 billion annually. We knew back in August that Samsung wanted to invest $4 billion towards upgrading the Austin facility.

With Samsung losing a high-stake Apple v. Samsung trial in the United States to the tune of $1+ billion in damages, and with news that Apple has been poaching Samsung’s chip experts and rumors of order stoppage for chips and TSMC prepping to produce Apple chips, no wonder Samsung is now trying to squeeze as much revenue out of the iPhone maker as possible.

“Samsung gets caught stealing Apple’s designs, so they raise the price of the chips by 20 percent”, writes Jim Dalrymple of The Loop.

Samsung knows all too well that its chip biz with Apple is slowly but surely winding down. Come 2014, its rival TSMC will get the lucrative contract to produce chips powering iOS devices in 2014 and going forward.

Is Apple right to move chip production away from Samsung?

  • Duh. Ya..

  • Wow, maybe they are butt-hurt from not being a part of designing the superprocessors A6 and A6X. If you have used one of them you will notice the significant increase in speed.

    • Yes, you took the words out of my mouth. And also probably because they know that the next one may possibly not be manufactured by them and that will cost them some money. And yes, if you compare the A6 to the best dual-core competitor there isn’t something as good right now. Imagine if the A7 will have a quad-core processor. While it isn’t necessary, it would guarantee performance better than anyone else since OSX has been making that for a long time and I wouldn’t be surprised if they also brought hyper-threading to iOS.

      • Out of your mouth? Your ego is what drives your ignorance.

    • samsung sucks… but apple is going down and samsung is the only phone maker in a position to take the lead…

      • might be going but i dont think its that easy.there should be some aces still hidden.

  • I’ve said before and I’ll say it again .. You don’t line the pockets of you closest rival .. Apple is right in moving away from Samsung …

  • lol…..

  • nima

    why does apple get chips from there enemies? they should make it in foxconn or make there own company! guys if apple didnt pay 4 BILLION USD they could have made there own cOMPANY!!!!

  • Keith S.

    I find it hard to believe that: a) Apple didn’t lock in a long-term contracted price, as they would with any other supplier, to avoid just such a thing — especially someone competing in the same space; and b) Samsung would raise prices ONLY for Apple, and risk being slapped with anti-competitive behavior and/or unreasonable licensing.

    I’m starting to suspect the lawyers for the two companies are just having a secret group affair, and will do anything to keep meeting in the courtrooms — the only place where their expression of love is not forbidden!

  • Man a lot of fan boy here. First of all by saying Samsung suck is an opinion. Give me some reason why Samsung suck and how does the phone look like apple iphone? Secondly the article is asking if it apple right move to ship away from Samsung manufacture. Read your article next time.

    • iamnotfan

      I am an android fanboy,
      But if i can make money out if Apple of course i Will do it.

      And i am very Loyal to People I care, Not to any tech companies that they just want my money.