Welcome back ladies and gentlemen to another fight between these two heavy-weights of the industry. It’s round who-knows-what, and the giants have left the lawyers and the court rooms for this one, going at each other right at the roots of the supply chain. Some could say it’s below the belt (no more puns, I promise).
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The Sharp Corporation, as you may or may not know, is one of Apple’s key suppliers of display screens, counting for around 30% of Apple’s supply numbers. Even though you’d assume that Apple’s constant orders would have a positive effect on the bottom line, Sharp is currently struggling in the current market conditions.
Well, Samsung comes in at this point investing $110 million in Sharp stock, an action which is considered by many to be the first in a line of small steps in which Samsung will start to court Apple’s and other smart phone industry suppliers, what with it’s raise in its mobile devices. While this investment only constitutes 3% of the company, it’s still enough to get Apple’s attention.
As Samsung sells more and more devices, its need of suppliers grows (right now it is having no problems keeping with the demand by its own means), Apple will get more problems with its component supply, not to mention losing it’s clients. This idea has gone to such an extent that some even say that the Samsung Galaxy S IV will be the last smart phone launched under Apple’s shadow (as analyst of IBB consulting, Jefferson Wang stated for Forbes Magazine).
Of course, this will benefit the parts suppliers. Apple has a very tight rope around it’s supply chain, allowing them to negotiate fiercely in order to get such a high profit margin they manage year-on-year. But if, say Samsung would come along interested in a business relationship with one of its suppliers, then Apple would lose its grip on them and would have to negotiate in competition with Samsung, where the supplier will have the upper-hand.
But this investment on it’s own will not shake the foundation of Sharp’s and Apple’s agreement. The two companies are said to be currently collaborating with each other on the next Apple TV device.