Samsung denies massive chip price hike that could hurt Apple’s margins

Monday’s news by South Korean newspaper Chosun alleging Samsung was jacking up prices of Apple mobile chips by as much as twenty percent in order to get even with its largest component buyer for losing more than $1 billion in damages in the massive Apple v. Samsung patent case is untrue, an unnamed Samsung executive reportedly told a Korean newspaper Wednesday. A-series of chips that power iOS devices are designed by Apple and built exclusively by Samsung at its sophisticated facility in Austin, Texas…

The Street highlights an article by Korean newspaper The Hankyoreh. The story quotes an unnamed Samsung executive who debunked the rumor.

Apparently, this executive explained that chip prices are “set at the beginning of the year and aren’t changed easily”, which is more than plausible to us.

After reports earlier in the week that the South Korean technology giant was raising application processor prices on Apple by as much as 20 percent, a Samsung Electronics official denied the reports to The Hankyoreh, a Seoul-based newspaper.

The unnamed official noted that prices are set at the beginning of the year and aren’t changed easily.

The Apple-branded processors represent between six and nine percent of the total component cost of iOS devices.

The rumored price hike, analysts estimated, bore a potential to hurt Apple’s margins short-term, until Taiwan Semiconductor Manufacturing Co (TSMC) began producing Apple chips in volume by 2014, as had previously been rumored.

According to Piper Jaffray’s Gene Munster (via AppleInsider), a 20 percent increase in chip prices would result in a hit to Apple’s margins between one and two percentage points.

He wrote in a note to clients:

We believe that if Apple were to move to another vendor in the next year or two, they may be abler o negotiate better chip prices, which would roll back the impact from the Samsung price increase.

Earlier today, Samsung’s mobile chief said the Galaxy maker is not interested in an HTC-like settlement with Apple over ongoing patent woes.

As for the price hike rebuttal, I guess we can all breathe a collective sigh of relief now.

Is it just me or is Samsung messing with Apple here?

Sounds to me they intentionally leaked the original rumor as a warning of what could happen if Apple continues with its legal crusade.

Or, perhaps Samsung Electronic wants to buy itself more time amid rumors that rival TSMC will be taking over the Apple chip biz?

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