Apple

Why Samsung, Apple Make Strange, But Profitable, Bedfellows

Samsung Electronics and Apple have appeared to be long-time fierce rivals in the smartphone market, but the South Korean consumer electronics company recently supplied the semiconductors and OLED screens for the iPhone X. In fact, Samsung stands to benefit greatly if its rival has a win on its hands.

That’s according to a recent news report in the Wall Street Journal, which reported that Samsung could make billions if the iPhone X takes off. The iPhone X becomes available next month.

Based on analysis by technology market research provider Counterpoint Research, Samsung could see approximately $4 billion in revenue from parts supplied to Apple for the iPhone X, more than it will from the parts it makes for its own Galaxy S8 smartphones. That $4 billion is expected to come in the 20 months following the release of the iPhone X for sale on Nov. 3. Counterpoint estimates Apple will sell 130 million iPhone X smartphones, giving Samsung $110 on each phone through the summer of 2019. Global sales of the S8 are expected to exceed 50 million, earning the company $202 in component sales in the first 20 months.  

“These are two of the largest companies on the planet deeply tied at the hip and directly competitive,” said David Yoffie, a professor at Harvard Business School, in the report. “That makes this [situation] stand out compared with almost any relationship you can think of.”

While the two companies are rivals when it comes to selling smartphones, Samsung isn’t negative about the iPhone. According to the WSJ report, in meetings of the consumer electronics giant’s executives, staff are allowed to pull out their iPhones as Apple is Samsung's best client. The publication noted the close relationship between the two companies happened more than a decade ago when Samsung founder’s grandson Lee Jae-yong negotiated with Apple founder Steve Jobs to provide flash memory for iPods. The relationship has since grown, evolving into Samsung as the supplier of screens and semiconductors for new Apple products.

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