Why Apple Uses Samsung Parts

What if I told you that several of the parts in your iPhone was supplied by Samsung, one of Apple’s biggest competitors? It may be surprising, but both companies benefit from this relationship, Due to the way each of them does business. Apple started as a product retailer, not a manufacturer and although they did operate the assembly lines of early Macintosh Computers, Apple never made their own memory chips, processors, or displays. Instead, they submitted designs to third-party manufacturers, leveraging their expertise and existing assembly infrastructure.

Companies like Apple are called fabless. They design and market hardware while outsourcing the manufacturing to someone else. For example, they design the iPhone, but Foxconn manufactures it. This approach also extends to individual parts. The A16 chip is custom-designed by Apple, but it’s fabricated by TSMC and for years Samsung operated as a manufacturer. Supplying lithium batteries, semiconductors, image sensors, camera modules,s and displays to companies like Apple, Sony, and Nokia.

Samsung Manufacture
Samsung Manufacture

It helped Samsung become more successful, although all the big money was in becoming a leading consumer brand. So in the late 90s, Samsung formed a new business strategy to create their own premium mobile phones and compete with Apple, Sony, and Nokia, directly that Is when things got a little awkward.

Since the iPhone was revealed, Samsung literally created a handbook detailing every aspect of the device that they should copy for their own smartphone.

Apple and Samsung
Apple and Samsung

This prompted a lawsuit from Apple for patent infringement, which they eventually won. But despite the bad blood between them, Apple and Samsung needed each other.

Apple doesn’t have many display suppliers to choose from, they tried to diversify by purchasing from LG and BOE, but those companies simply didn’t have the scalability and consistency of Samsung.

BOE , LG and Samsung
BOE, LG, and Samsung

That is why, even to this day, over seventy percent of the display panels used in iPhone 14 Models are from Samsung. And if you are wondering why Samsung doesn’t just cut Apple from their components, it is because Apple is their biggest customer, So preventing them from buying their parts doesn’t mean significantly less revenue, but it also means Samsung won’t benefit from economies of scale. Since the panels they use in their own Galaxy devices are subsidized By Apple’s large display purchase orders.

Samsung and Apple partnership
Samsung and Apple relationship

So while they may not like each other, Apple and Samsung would only be harming themselves by ending their business relationship.

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