Samsung's parts sales to Apple edge towards $11 bil.

Samsung confident Apple will maintain 'partnership'

Despite ongoing patent battles in the courts, Apple is planning to buy parts worth a record $11 billion from Samsung Electronics this year, an official from Apple's one Korea-based parts supplier said Sunday.

Rumors about the exact amount hover above $9 billion, up from $7.8 billion last year.

``The amount of the current contract is around $9.7 billion," the official said, adding that the popularity of Apple products lines the pockets of Samsung as well. He said that the amount may go up to $11 billion, depending on the demand for Apple products.

The official asked not to be identified, which is not surprising.

The procurement will reach a new annual record. The amount is expected to increase until at least 2014 under the current terms of their contract.

Apple will buy chips from Samsung for its new iPads with Long-Term Evolution (LTE).

``The contract is expected to rise to $11 billion by the end of this year as Apple is planning to release a smaller iPad, probably with a 7.85-inch screen, and to sell more of its MacBook Air PCs using Samsung’s faster solid state drive (SSD) storage,’’ the official said.

Apple CEO Tim Cook agreed with Samsung Electronics Chief Operating Officer (COO) Lee Jay-yong to use the Korean firm’s components until the end of 2014 during Lee’s visit to his office in Cupertino, Calif., late last year.

The iPhone and iPad maker bought $7.8 billion worth of parts from Samsung in 2011 including displays, mobile application processors (APs), NAND flash chips and mobile DRAMs _ making it Samsung’s single biggest customer as well as nemesis.

Open up a new iPad and inside are Samsung’s mobile APs, displays and memory chips.

``Apple’s top management still believes Samsung is the only parts maker in the world ideally-positioned to meet all of the critical conditions _ better pricing, technolgically-enhanced products, on-time delivery and the capability to immediately respond to any emergency situation,’’ said another source.

Apple making large purchases of Samsung parts makes the Korean firm more competitive over, among other things, pricing.
Samsung is confident in its dispute with Apple due to its status as a top supplier.

“We don’t see any negative impact on the partnership with Apple because of the legal issues,’’ Jun Dong-soo, head of Samsung memory unit, said recently.

It will also supply flat-screens utilizing new PLS-based LCD technology for smaller iPads, while it’s in talks with Apple to ship more LCDs to be used in the next iPhone this year.

``Samsung is putting huge resources into becoming the world’s first OLED panel supplier to Apple for use in i-branded devices. Apple has the intent to use Samsung’s OLED technology, however, Apple doubts the output commitment for OLED screens by Samsung,’’ the source said.

Apple’s new iPad is made using Samsung’s QXGA panels. Samsung’s biggest rivals, local competitor LG Display and Japan’s Sharp aren’t ready to supply the panels as a result of manufacturing problems, said market research firm IHS iSuppli.