Apple Cuts Samsung Memory Chip Order

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.

Apple has cut down its order of memory chips from Samsung, reducing its reliance on its smartphone rival for components, say supply chain sources cited by Reuters. Photo: @NickyColman/Flickr

Samsung has been a core supplier of Apple, producing micro processors, flat screens and memory chips for the iPhone, iPad and iPod.

According to Reuters, 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.

There had been speculation that Samsung had been dropped from list of memory chip suppliers for the iPhone but sources have confirmed that Samsung is still on the list

A source told Reuters: “Samsung is still in 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 news means that the iPhone 5, widely expected to be announced next week, will feature fewer Samsung components than its predecessors.

The decision has apparently come as Apple looks to widen its supply chain.

Apple often 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.

Apple picked China’s Amperex Technology Ltd and Japan’s Panasonic Corp for batteries used in the next iPhone, 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.

Elpida was selling more than half of its mobile DRAM chips to Apple.

The decision comes on the day that judge Lucy Koh in the United States has turned down Apple’s request to reschedule a hearing on September 20 that could see the ban on Samsung’s Galaxy Tab 10.1 lifted

The judge will hear Samsung’s motion to dissolve the preliminary injunction against the Galaxy Tab 10.1 in California but Apple wanted to reschedule the hearing for December, reports The Telegraph.

Apple argued that the judge would hear Samsung’s motion to lift the injunction three months before hearing Apple’s request to ban eight Samsung devices which is scheduled for December 6.

If Koh lists the ban on the Galaxy Tab 10.1 Samsung may be able to sell the product in the run up to Christmas.

Samsung, the world’s top smartphone maker, announced on Thursday that sales of its Galaxy S III smartphones topped 20 million since its late-May debut.

Meanwile, 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.

Samsung shares rose more than 4 percent on Friday to a 2-week high – and set for their biggest one-day gain in 6 weeks.

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