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Comment by blah32497 | Hacker News Reader

But it's a fundamentally uneven relationship.

If Apple starts getting marketshare, Apple wins and Samsung wins.

If Android starts getting marketshare. Samsung wins and Apple loses.

I bet each production cycle Apple starts threatening it will manufacture its own chips and it starts to feed the rumor mill. Samsung gets nervous and gives them a very good deal.

Even if Samsung's profit margin drops significantly, it's still going to look much much better to the markets than if they lose their Apple contract.

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"If Android starts getting marketshare. Samsung wins and Apple loses."

This is conventional wisdom and at some level of course it's true but in general I think it's misleading. The fact is that the markets Apple and Samsung are in are not identical. The market Apple competes in roughly equates with the top third of the smartphone market. Samsung competes in the entire phone market. It's quite possible for both to gain market share at the same time in their respective markets. And even if they weren't it's possible for both to lose market share but still be successful because the market for smartphones itself is increasing rapidly.

The way I look at it, is that Apple is trying to have its way by shopping between Samsung, TSMC, and any others. Their leverage doing this comes from offering bulk purchases, or in the case of LCDs, helping to finance large capital expenditures. Their biggest worry right now is that Samsung's competition doesn't seem able to compete, at least at scale.

At the end of the day though, if push ever comes to shove, there isn't much they couldn't afford to buy outright, even their own fabs. I was holding out hope that they were trying to save 200B to build out their own wireless infrastructure, but they could conceivably buy control of Intel instead.

Keep in mind that the ARM processor space operates on razor thin margins, and Apple's iPhone business does not. Also it has been rumored for a long time that apple is moving most of its chip fab business to TSMC, but I suspect their waiting for the next process node before making the jump. A company that values reliability like apple prefers a mature process.

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