Is Apple Feeling Samsung’s Pain?
Apple (NASDAQ:AAPL) has had to find new suppliers for batteries used in the iPad and its MacBook computer lines after Samsung cut off its partnership with its smartphone rival, a Chinese news outlet has reported. Apple has recruited Chinese firms Amperex Technology Limited and Tianjin Lishen Battery for battery supplies, the China Business News report added.
What May Have Led to the Supply Switch?
Apple and Samsung share a strange dichotomous relationship. The Korean company has been a years-old supplier of parts for device made by Apple, but in recent years, the two have become fierce rivals that compete in the same consumer markets. An earlier report about Samsung having raised the prices of the processors it supplies to Apple was dismissed by the Korean company, so this latest news will have to be taken with a pinch of salt. However, if true, this would be the latest in a series of rifts between the two companies that have also been engaged in patent-related court battles around the world. What hasn’t been denied is the fact that Apple is working to develop Taiwan Semiconductor Manufacturing (NYSE:TSM) and other firms to take over chip production sometime in the future.
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How Could This Affect Apple’s Stock?
When news of Samsung possibly raising its chip prices spread, Piper Jaffray analyst Gene Munster calculated that a 20 percent increase would hit Apple’s gross margins by about 1 to 2 percent. Of course, the verity of that report was eventually completely denied. While supply problems can cause big problems for Apple and its stock price — the company’s recent iPhone 5 and iPad mini shortages were blamed on component supply shortfalls and contributed in good part to the drop-off in its share price — the California company’s cash reserves mean that it will not have major trouble finding alternatives, if the need were to arise. For now, the news is not likely to have a major negative impact on the shares.