This move by Micron to buy Elpida would make Micron the single largest supplier of DRAM to Apple for their mobile products (and possibly for all of their products). The move accomplishes multiple goals, but most importantly it limits Apple’s reliance on Samsung. As we have already stated Apple has been moving away from reliance on Samsung for production of many of the parts for the iPhone, iPod and iPad. The continuing war with their primary parts source is sure to have soured the relationship between the two. Apple knew this before they filed suit against Samsung last year and were already looking for alternate sources as early as Q2 2011.
Apple will also likely be moving foundries for their A series SoCs away from Samsung and to another manufacturer if they can get guarantees on production levels and manufacturing preference. This type of preferred treatment was what Apple wanted from TSMC, but was turned down in the end. Samsung knew this was going to happen as would anyone that has followed Apple’s history with their partners. They dumped Motorola citing and inability to keep up with demand which was followed by them dumping IBM for the same reasons. Now they had a deal with Intel that we imagine will only last as long as Apple wants it to.
Samsung has more than likely already countered the effect of the lost sales to Apple, long before this announcement was “leaked” to the press. The reports so far all fail to note that this decision was already in progress by the end of 2011 so it is not news by any means. It is a classic case of FUD though and is being spun by both sides to claim that Samsung is getting back at Apple or that the loss of Apple memory sales will break Samsung. Both are exceptionally inaccurate as no company allows themselves to become too reliant on another, it is very bad business to do so. In the end the reports will have a negative impact on Samsung stock prices for a while. This has more to do with the analyst firms that “forgot” about the manufacturing shift they all talked about last year and their desire to push up shares of Apple which many of them also own. There is nothing like spinning information to make yourself a little more money.
Samsung and Apple still have a contract that will prevent them from severing ties completely, but everyone knows that the honeymoon is over. If the two do decide to extend or renew the contracts it is likely that it will be on a very limited basis and only if they do not have any other choice. Both companies will continue to make money and the press and analysts will continue to spin as much as they can to bolster their predictions that Apple stock will hit $1,000 per share, even if they have to be just a little misleading about what they release to investors and the press to get there.
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