Apple Inc has reduced its orders for memory chips for its new iPhone
from its main supplier and competitor Samsung Electronics Co, a source
with direct knowledge of the matter said on Friday.
South Korea's
Samsung is a core Apple supplier, producing micro processors, flat
screens and memory chips both dynamic random access memory (DRAM)
chips and NAND memory chips for the iPhone, iPad and iPod.
Apple
has been cutting back its orders from Samsung as it seeks to diversify
its memory chip supply lines, although the South Korean firm remains on
the list of initial suppliers for the new iPhone, the source told
Reuters. The person declined to be named because the negotiations are
confidential.
The Korea Economic Daily, citing an unnamed industry
source, reported on Friday that Apple had dropped Samsung from the list
of memory chip suppliers for the first batch of the new iPhone, the
iPhone 5, which is widely expected to be unveiled next Wednesday. The
report said Apple instead picked Japan's Toshiba Corp, Elpida Memory and
Korea's SK Hynix to supply DRAM and NAND chips.
"Samsung is still
on the list of initial memory chip suppliers (for new iPhones). But
Apple orders have been trending down and Samsung is making up for the
reduced order from others, notably Samsung's handset business," the
Reuters source said.
Samsung's handset business, led by robust
sales of its flagship Galaxy line of products, has become the most
important earnings pillar, bringing in around two-thirds of Samsung's
overall profit, and is driving sales of component from memory chips to
micro processors and displays.
Samsung, the world's top smartphone
maker, said on Thursday that sales of its Galaxy S III smartphones
topped 20 million since its late-May debut.
The source denied
market speculation that the reduced orders from Apple were prompted by a
souring relationship between the two companies, which are locked in
global patent disputes, and said Apple had already been looking to widen
its supply chain.
Bernstein analysts estimate Apple's purchases
of mobile DRAM and NAND chips from Samsung have fallen significantly and
now only account for around 2.5 percent of Samsung's 2012 earnings.
Diversification
California-based
Apple frequently faces a supply crunch when a new product is launched,
triggering a consumer stampede that drives demand far in excess of
supply and production capability.
Earlier this year, a source told Reuters that Elpida was selling more than half of its mobile DRAM chips to Apple.
For
batteries used in the next iPhone, Apple picked China's Amperex
Technology Ltd and Japan's Panasonic Corp, dropping Samsung SDI from the
initial supplier list, the Korea Economic Daily said.
In
flat-panel displays, LG Display is one of the dominant suppliers for the
new iPhone, according to sources close to the matter, as Japan's Sharp
Corp has fallen behind schedule on iPhone display production.
Apple
and Samsung have taken their bruising patent disputes to some 10
countries as they vie for market share in the booming mobile industry.
Apple won a landmark victory last month after a U.S. jury found the
South Korean firm had copied key features of the iPhone and awarded
Apple $1.05 billion in damages.
Samsung declined to comment and Apple was not immediately available to comment.
Still,
Samsung remains the sole producer of Apple-designed micro chips that
power the iPhone and iPad, making their relationship too important for
either party to put at risk.
Samsung's component sales could hit
$13 billion next year and bring in $2.2 billion in operating profit,
according to a recent estimate by Morgan Stanley. That's nearly 8
percent of estimated group operating profit.
Shares in Samsung
rose more than 4 percent on Friday to a 2-week high - and set for their
biggest one-day gain in 6 weeks. The gain was broadly in line with a
technology sector rally after a maker of solid-state drives, which uses
flash memory chips, warned of component shortages, raising expectations
that production cutbacks have stopped a slump in prices for flash memory
chips.
SK Hynix shares jumped 6.2 percent and, in Tokyo, Toshiba gained 4.3 percent.
Copyright Thomson Reuters 2012
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