Samsung won't increase the price of Apple processors: report

Hot on the heels of a report that Samsung had hiked the price of the A-series processors used by Apple in the iPhone, iPad, iPad mini, and iPod touch, comes another that says that no price rise has occurred.

An unnamed Samsung Electronics official told Korean newspaper The Hankyoreh (via?The Street)?that prices have not been bumped, and went on to explain that prices are "set at the beginning of the year and aren't changed easily."

According to Piper Jaffray analyst Gene Munster, a 20 percent increase in processor prices -- which is what was initially being reported -- would have hit Apple's gross margins by about 1 to 2 percent.

Research firm IHS?estimates it costs Apple?The A6 processor powering the iPhone 5 has been estimated by ?to cost Apple about $17.50?per device.

Things have been rocky between Apple and Samsung, since the two companies locked horns in a series of bitter patent battles across four continents since April 2011.?In August, a court ruled that Samsung had to pay Apple more than $1 billion in damages for infringing on a number of iPhone and iPad features with its Galaxy S series of smartphones. Samsung has since appealed against the ruling.

In other territories Apple has not enjoyed the same legal success, with courts in the Netherlands and Japan dismissing Cupertino's claims of infringement by Samsung.

However, as pointed out by Apple chief executive Tim Cook during the company's fourth quarter earnings call: "We continue to be a customer of Samsung and continue to have a commercial relationship".

While Samsung may get some pleasure from squeezing an extra 20 percent per processor from Apple, it is likely that the victory would be short-lived. While the A-series processors that Apple uses in its iDevices is made by Samsung, they are in fact Apple's own designs, and the company could shift to another vendor, such as TSMC. A price increase would likely act as a catalyst to make that move sooner.

The bottom line is that Samsung might win a small victory, but may lose the battle in the long term.

Image source: Apple.

Source: http://www.zdnet.com/samsung-wont-increase-the-price-of-apple-processors-report-7000007412/

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