As Apple and Samsung try to purge themselves of dependency on one another things are bound to get even more ugly over the next 12-18months. A report came out earlier this week that Samsung was planning to raise the price on Apple’s processors by 20%.
The significant price increase would mean Apple’s cash cow – the iPhone – wouldn’t have as profitable margins which would negatively effect Apple’s bottom line. However, an official at Samsung has come out today to deny the changes and says that a 20% price hike isn’t coming.
The official said that prices are set at the beginning of the year and aren’t changed easily, so a sudden 20% spike at the beginning of 2013 isn’t really plausible. If Samsung did choose to increase prices Apple could choose to shift production to another vendor, but such a move might be 1-2 years away.
If Samsung were to raise prices by 20%, analyst Gene Munster claims Apple’s gross margins would take a 1% to 2% hit, but Apple would probably just move to another supplier. Apple is still one of Samsung’s biggest customers, so losing Apple’s business would also negatively effect them as well.
Source: The Street.