Apple: No MERCY For Samsung

After punishing it in court, Apple (NASDAQ:AAPL) is now bullying rival and supply partner Samsung outside of it: the iPhone maker has reportedly reduced its orders for memory chips for its next-generation smartphone from the Korean company. While Samsung remains a supplier, Apple is seeking to diversify its memory chip supply lines, The New York Times said.

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The reduction is not said to be direct result of the recent shift in the relationship between the two companies, but Apple’s decision is still likely to have a big impact on Samsung, which is one of the biggest suppliers for the former. According to analysts at Bernstein, Apple’s mobile chip purchases from its rival now account for only 2.5 percent of Samsung’s 2012 earnings. The Korean company is reportedly trying to make up the deficit by supplying to its own device manufacturing business. Samsung’s handset business has grown considerably over the last couple of years and now makes up almost two-thirds of the company’s overall profits.

The Korea Economic Daily reported on Friday that Apple had put Samsung off the list of memory chip suppliers at least for the first batch of the new iPhone, which is expected to be unveiled next week. Apple was instead getting supplies from Japan’s Toshiba, Elpida Memory, and Korea’s SK Hynix.

However, Apple can’t afford to strain the relationship too much, considering Samsung is still the sole producer of Apple-designed micro chips that power the iPhone and iPad. Apple also frequently faces a supply crunch at the time of new product launches because of immediate massive consumer demand.

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