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Report: Samsung slaps Apple with 20% price increase for chips

Apple has been forced to pay 20 per cent more for its Samsung-supplied mobile processors, says report

Apple has reluctantly swallowed a 20 per cent price increase for its mobile processors supplied by Samsung, according to reports.

South Korean newspaper Chosun Ilbo cites a person familiar with the negotiations between rivals Samsung and Apple, who said: "Samsung Electronics recently asked Apple for a significant price raise in application process. Apple first disapproved it, but finding no replacement supplier, it accepted the [20 per cent increase]"

Samsung's contract to provide chips to Apple expires in 2014, and Apple is believed to be looking into other suppliers to take over its mobile processors, such as Taiwan-based TSMC and Kinsus Interconnect Technology Corporation. Taiwanese suppliers could produce processors for about 30 per cent less than Samsung following the price hike.

But the question is whether the Taiwanese manufacturers will be able to keep up with the huge demand for Apple's iOS devices, as Apple is thought to have ordered more than 200 million processors from Samsung in 2012 alone.

Apple may also decide to make its own chips in the future. Following the recent executive shake-up, Bob Mansfield has been put in charge of Apple's semiconductor and chip-making team, indicating that the company is focusing on the future of its chips. This has also lead to speculation that Apple is planning to ditch Intel in favour of using its own ARM-based chips in future Macs.

Earlier this year, it was reported that Samsung had stopped supplying Apple with LCD panels because of financial pressures caused by Apple's tight supply chain management. These reports were later denied by Samsung, but Apple has since been receiving displays from additional suppliers such as Sharp, a manufacturer that Apple is rumoured to have bailed out for $2.5 million.

[Via MarketWatch]

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