First, South Korean smartphone maker Samsung tries to steal Apple’s coolness, now the company is trying to mimic the California firm’s penchant for secrecy. Samsung reportedly is now asking suppliers to sign non-disclosure agreements with penalties of up to $1 billion (you read that right).
The push for an NDA comes as Samsung Electronics is reportedly developing a next-generation Galaxy smartphone. At the heart of the secrecy agreements is preventing disclosure of product information, which has become an industry all of its own as Apple and its rivals alternately build hype while suppliers leak product details…
The new demands for information security follows Samsung’s bruising patent-infringement battle with Apple, eventually leading to a $1 billion jury award in 2012.
Korea’s Electronic Times reported Monday:
According to an industry source on January 13, the Korean electronics giant recently signed NDAs with both old and new subcontractors clearly stating amounts of compensation in the range of hundreds of millions to billions of wons.
Note: one billion won is approximately $100,000.
Preventing leaks of product information was described as a “key part” of these non-disclosure agreements.
Another source told the news site that while Samsung’s NDA didn’t include penalties out of the norm, particular emphasis was placed on “items related to information security”. Leaks of information that detailed when a product is to be released or outlines a product’s specifications would be most costly for suppliers, according to the report.
Along with the sting of paying its rival Apple a cool $1 billion for infringing its patents, the new desire for secrecy at Samsung may be to protect Samsung Electronics’ chief profit center: mobile phones.
The company’s first-quarter 2013 operating profits are expected to fall 5.88 percent compared to the previous quarter, according to financial information service FnGuide.
Perhaps Samsung is hoping to prevent a repeat of how Apple stock dipped on word it was cutting iPhone 5 orders – or earlier investor concerns demand for Apple products was cooling, and the resulting hits to stock value.
While PatentlyApple suggests such numbers signal “Samsung’s Galaxy S III momentum is beginning to crash and burn”, more likely the sudden demand for supplier NDAs is simply a smart move by a company wanting to protect its nest egg.
Samsung’s Galaxy was recently crowned the world’s best-selling smartphone.
As Christian reports today, the Samsung Galaxy S IV, an update of the Galaxy S III, is expected to be announced in January. With the iPhone 5S (or 6) possibly launching in June or July, it might be important for Samsung to ensure suppliers don’t leak too many specifics.
@dujkan I can’t even tell you our experiences with Samsung lately. They’re turning into Apple. I’m going to start recommending others.
— Anshel Sag (@anshelsag) January 15, 2013
@dujkan Nope. Actually dealing with the company. They’re trying to act like they’re Apple, and I don’t like that attitude.
— Anshel Sag (@anshelsag) January 15, 2013
Of course, Samsung can’t slap U.S. courts with an NDA – although its tried.
The South Korean firm’s recent bid to seal sales information failed.
The information, filed with a Californian federal court ahead of the penalty phase in Apple’s legal win, was deemed to not damage Samsung’s competitiveness.