One of the reasons why companies aren’t eager to be heavily dependent on each other is because in the event something goes wrong, their operations would be affected hugely, and according to a recent report from The Wall Street Journal, this could be evidenced in Apple’s decision to switch from Samsung to TSMC to manufacture their A-series of mobile chipsets.
While Samsung did not reference Apple directly, they did note that “main customers” had continued to decline. This is according to Robert Yi, Samsung’s head of investor relations who spoke at a recent conference call. “Sales and profitability from System LSI (logic chip business) worsened as demand from main customers continued to decline.”
So how much of a loss could we be looking at? Well according to Lee Seung-woo, an IBK Securities analyst, he believes that Samsung could be posting a loss of 877 billion won this year (which is roughly $851 million). Combine that with Samsung’s operating profit of around 203 billion won (~$197 million), it would be about a $1 billion loss to Samsung, theoretically speaking, of course.
We can’t be sure if this is all largely thanks to Apple since we’re sure Samsung has other customers as well, but safe to say with the number of iPhones Apple ships out, switching to TSMC was a huge blow to Samsung’s business. However interestingly enough there have been rumors that Apple could return to Samsung in 2015, so perhaps we could see business pick up then.
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