) is pushing ahead with a plan to purchase supplies from new
vendors as it attempts to sever ties with chief arch rival,
Samsung. According to
The Wall Street Journal
, Apple has been ordering some of its memory chips from SK Hynix, a
South Korea-based manufacturer of flash memory and dynamic random
access memory (
At the same time, Apple is expected to use Sharp's in-cell
displays for the upcoming iPhone 5 as the company moves to cut
costs. The new displays are reportedly
less expensive to manufacture
than those previously provided by Samsung. However, they are also
more difficult to produce, which could lead to a significant
This marks the first time that Apple has taken a step to move
away from Samsung, a company that doubles as both a competitor and
a supplier. Samsung produces chips, displays, and other
technologies for several corporations within the smartphone and
tablet industries. The company also manufactures its own devices,
including those within the categories Apple wishes to dominate --
smartphones, tablets, and computers.
It is not uncommon for rivals to team up to manufacture new
products. Sony (NYSE:
) and Panasonic (NYSE:
) recently put aside their competitive differences to
and produce OLED displays together. Their goal is to achieve
low-cost mass production OLEDs by 2013.
For many years, the Apple/Samsung relationship was beneficial to
both firms. Apple enjoyed the luxury of purchasing quality,
low-cost supplies from Samsung, which earned billions of dollars in
Their relationship began to fall apart when Apple sued Samsung
for infringing on its patents. While the complaint had nothing to
do with their supplier agreement, it has grown into a worldwide
legal dispute with lawsuits filed in multiple nations.
Even without the lawsuits, some analysts expected Apple to
switch suppliers as it attempted to secure and maintain worldwide
dominance of the smartphone market.
During the second quarter, Samsung phones outsold the iPhone by
more than 20 million units
. This was accomplished with the help of numerous device
iterations, including the hugely popular Galaxy S III.
Samsung's success may have also been influenced by international
shopping trends. In 2011, Apple
lost market share
in Europe as consumers switched to lower-cost alternatives.
(c) 2012 Benzinga.com. Benzinga does not provide investment advice.
All rights reserved.