Samsung makes (excellent) screens for iPhones, which are huge competitors to Samsung's own flagship phones, but Samsung still seems happy to take the profits from the screen sales. If there are smaller potential competitors that Samsung won't work with it's most likely because the scale is too small to be in their economic interest, not because they're rejecting profits in order to stifle potential competitors.
iPhones sell massively well though, to the point where it would be a big loss if Apple went to another company for their screens. You just can't screw with a company the size of Apple without consequences. It's not like they'd go "oh no, no more iPhone now I guess :'(" if Samsung decided not to sell them screens anymore.
The problem is more with smaller companies that could be destroyed before they even get a chance to compete. Those can be bullied pretty easily by a company the size of Samsung.
I don’t really see how it works both ways. It’s hard to imagine a bigger scarier competitor to Samsung than the Apple iPhone, yet we agree Samsung is happy selling screens to Apple.
I recall reading a breakdown at one point a few years ago that indicated that between screen, fabs (before Apple went for TSMC) and memory, Samsung made more money from each iphone sold than they did for each galaxy S phone of the time. Seems like a winning deal to me.
Not really. Revenues and Profits of Samsung group and Apple are roughly comparable and in many ways Samsung's revenue streams are more diversified and sustainable.. stock valuation notwithstanding.
Samsung SDS made $635 million in profit in 2019 which I think was higher than ARM? As far as I'm aware the 'Samsung Group' doesn't actually have all the companies under that so it's difficult to see what the overall revenue/profit is of the entire 'group'. It has quite a few other companies, like heavy industries, insurance, asset management, etc and I think they all have thousands of employees and are very large companies in their industries so I'd be surprised that when combined the other companies weren't significant. Did you have any data on this?
Samsung is a massive company ... the division that handles screens is managed independently from the one that makes smartphones.
It must be probably weird for Apple technical staff to communicate so closely with one division of Samsung while fighting for market share with another division of the same company.
> Samsung makes (excellent) screens for iPhones, which are huge competitors to Samsung's own flagship phones, but Samsung still seems happy to take the profits from the screen sales.
What markup does Apple pay for Samsung OLED displays compared to Samsung’s other OLED customers? I think this is highly relevant if you want to use it as an example. Because if the markup for Apple is 5x that of other buyers of Samsung OLED displays then you certainly can’t say Samsung is “happy” to sell them to Apple.
Same for nVidia-owned-ARM: if they’re happy to sell ARM licenses at 5x the previous price, then that will surely increase sales for nVidia’s own chips. I guess my overall point is: a sufficiently high asking price is equivalent to a refusal to sell.
Resources are limited. If a Samsung phone and a Motorola phone need the same screen and there's not enough to go around, what happens?
A bidding war of course.
On the surface, it's capitalism at work. In reality, Samsung winds up in a no-lose situation. If Motorola wins, Samsung gets bigger margins due to the battle. If Samsung wins, they play "pass around the money" with their accountants, but their only actual costs are those of production.
I'd note that chaebol wouldn't exist in a free market. They rely on corruption of the Korean government.
