Apple Inc. (NASDAQ:AAPL) and Samsung Electronics Co.Ltd. (KRX:005930) have been locked in a bitter legal dispute for several years. The battle is a personal fight for Apple, which has repeatedly accused Samsung of copying its iPhone products and infringing on several patents. Samsung has countered the allegations by accusing Apple of trying to destroy the competition. Apple has reportedly removed Samsung as its main display supplier for the upcoming iPhone 6, because of the fierce rivalry.
The production of the iPhone display requires at least three main suppliers. Both Samsung and Sharp Corporation (ADR) (OTCMKTS:SHCAY) are rejected as primary suppliers, according to a report from Taiwan news source UDN. Possibly, the latest development could hit the production, so the launch of upcoming iPhone 6, which reportedly sports 4.7 inch display with 1704px X 960px resolution – one of the highest resolutions in smartphone ever.
Samsung’s Loss is Innolux’s Gain
Apple, however, is making every move possible to avoid any further delay in the launch of iPhone 6. Going further the two main suppliers for iPhone’s displays will be Japan Display Inc. (TYO:6740) and LG Display Co Ltd. (ADR) (NYSE:LPL). Taiwanese LCD panel maker Innolux Corp (TPE:3481) is reportedly selected as the third main supplier for the iPhone displays. According to the company’s website it has 14 factories spread across Taiwan and a total of 93,000 employees. Earlier rumors have suggested that the company has a rich experience working with Apple as it was a major display supplier for iPad 2 and iPad 3.
Reports from various supply chain sources suggest that Apple’s upcoming iPhone 6 will be available in two large screen sizes. The first device will sport a 4.7 inches display and will be released in September 2014. The display screen are an important feature in the iPhone 6, as the device display is reportedly going to have 416 pixels per inch. In the current iPhone 5S the display density is limited to 326 ppi. The other iPhone 6 will reportedly have a screen size of 5.5 inches, and will be released at a later period. It is still not clear who will make the display panels for the giant screen iPhone, dubbed as iPhone Phablet.
Apple has reportedly rejected Sharp’s display due to various issues, and it has been removed from the iPad Mini supply chain as well. Samsung’s displays were reportedly rejected because of the ongoing rivalry between the two companies. The korean electronics giant has been one of the biggest component suppliers for Apple in the recent past for a range of products including LCD, application processor and flash memory.
The Personal Spat May Have Affected Business Interests
The Apple-Samsung spat has raged fiercely for years. Both the companies have frequently sought a ban on the sale of each others products in various countries. In August 2012, Apple was awarded US$1 billion in damages after Samsung was found guilty of infringing on 26 Apple patents. In the most recent standoff during April 2014 Apple reportedly sought a total of US$2 billion in damages from Samsung but received only US$199.6 million as penalty. The case was a mixed verdict for both companies as Apple was also found guilty of infringing on one of Samsung’s patents, and was forced to pay a minor amount of US$158,000 as compensation. Samsung has reportedly sought to appeal against the verdict, although the appeal is likely to be dismissed.
In the past, Apple has tried to reach a settlement with Samsung to wind up all pending cases. According to the Korean times, there are indications that the war may finally be cooling off. Apple is reportedly in discussions with Samsung to finally bring an end to all cases within the next few months.
Can Apple Wean Off Its Dependency On Samsung?
Apple does not produce or manufacture its prized products. Instead, the production is handed over to a variety of companies in Japan, South Korea and China. This is the reason Apple is still dependent on Samsung for components such as its line of A8 processor chips for the iPhone 6, and displays for the iPads. In Q1 2014, the Korean giant accounted for 62% of all display panels for the iPad and was the largest supplier. Apple may slowly look for other options to wean of its dependency on Samsung, but for now business interests have been placed above than all. One of Samsung’s main customers for its part business is Apple. which reportedly paid a total of US$7.8 billion in 2012 for the purchase of several components.
It could also be possible that Samsung is removed as a display supplier for reasons other than those mentioned. However the rumors of a rowing business rift will continue to persistent between both companies, unless they can finally reach a settlement by the end of 2014.