Samsung Display to terminate Apple deal

By Cho Mu-hyun, Kim Yoo-chul

Samsung Display plans to terminate its contract with Apple and no longer supply liquid crystal display (LCD) panels to its long time partner, according to industry sources.

The news comes as speculation is mounting over a rift between the two firms that have shared a long relationship in electronic components.

The display panel manufacturer plans to completely cut its years-long business ties with Apple as it believes its American partner is no longer a cash-generator due to the iPhone maker’s stiffer supply-chain management structure.

The Cupertino, California-based firm has been lowering its reliance on Samsung-manufactured displays for use in its popular i-branded devices as it is leveraging its influence to source components from Samsung’s rivals attracted by better pricing.

“We are unable to supply our flat-screens to Apple with huge price discounts. Samsung has already cut our portion of shipments to Apple and next year we will stop shipping displays,” said one senior industry official, asking not to be named, Monday.

According to multiple sources contacted by The Korea Times, Samsung Electronics’ handset division and Amazon are increasing their orders for displays used in tablets, which is a sufficient substitute for possible losses from cutting the relationship with the iPad maker.

Samsung Display was the top supplier to Apple as of the end of the first six months of this year, shipping over 15 million LCDs, followed by its biggest rival LG Display with 12.5 million and Japan’s Sharp with 2.8 million, said market research firm DisplaySearch.

“But Samsung shipped less than 3 million to Apple during the third quarter of this year and we expect the quarterly shipment in the fourth quarter to fall to some 1.5 million,” said the source, who is directly involved with the matter.

Samsung Display didn’t provide panels for Apple’s new iPad — tentatively named the iPad Mini. The new tablet will have a 7.85 inch screen, which was exclusively reported by The Korea Times in March this year.

“Although we are losing Apple business, Samsung looks safe as we found the right alternatives — Amazon and Samsung Electronics’ handset division,” stressed the source.

A Samsung spokesman declined to comment citing the sensitivity of the issue.

Stock market analysts note that the critical reason for ending ties was due to the plummeting margins from supplying Apple.

Even before the coming launch of the iPad Mini, the price per pixel have more than halved from the iPad 2 to the new iPad.

Research firm DisplaySearch said the LCD display used in the new iPad, which has a resolution of 2048x1536 millimeters, sports 3.14 million pixels priced at $.00003 per pixel. The one for the iPad 2 was priced at $.000063 per pixel.