Samsung set to become Apple’s key go-to guys

New York: The two biggest smartphone manufactures may now get into collaboration after a long rivalry.

The ice between Apple and Samsung Electronics appears to be thawing since the war waged by Steve Jobs forced these one-time corporate comrades to end lucrative supply contracts and engage in costly legal battles.

In August 2014, Apple Chief Executive Officer Tim Cook agreed to begin winding down the patent suits with Samsung and the two companies are teaming up again on new products. 

Samsung will manufacture the main chip for the next iPhone as well as displays for other Apple products, and it is budgeting $14 billion for new plants and equipment that are expected to accommodate the requirements of its big new client.

From this alliance, Apple gets access to one of the biggest, most sophisticated chip manufacturing operations in the world to help it continue outselling the competition.

Samsung gets crucial new orders for its core chip making group to make up for stagnating profit in mobile phones.

 All other companies in the industry will suffer, starting with Taiwan Semiconductor Manufacturing Company and SanDisk. On April 29, Samsung reported first-quarter earnings showing growth in every one of its component businesses. Meanwhile, TSMC, which made the main chip for previous versions of the iPhone, cut its spending plans. 

The company, which makes memory chips for iPhone, iPad, and Mac, released a forecast on April 15 that fell short of analyst estimates. SanDisk cited lower prices, product delays, and loss of customers. Apple is believed to be one of those customers, having turned to Samsung for the flash drives used in many newer Mac models, according to analysts.

“Playing against Samsung is never easy, they took away SanDisk’s business at Apple” says Daniel Amir, an analyst at Ladenburg Thalmann. 

Apple was SanDisk’s biggest customer by far, contributing 19% of the chipmaker’s revenue, according to data compiled by Bloomberg.

Even as it’s expected to manufacture chips for Apple, Samsung continues to make smartphones of its own.

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