With Its Supply Lines Stretched, Samsung Courts Rival Apple's Suppliers

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Samsung have beaten out apple
Samsung tops cell phone charts

Samsung Electronics Co. has pulled ahead of Apple Inc. to become the leading smartphone maker. Doing this, however, has stretched the South Korean tech giant’s supply lines.

So Samsung has been courting some of Apple’s part suppliers. The two battled in court over technology patents, and now they’re going at it to secure the best supply of parts, Reuters reports.

According to Canaccord Genuity data, both companies grabbed 100 percent of the smartphone industry's profit between January and March. Apple will soon introduce a fresh product lineup that will reportedly feature a cheaper iPhone, for emerging markets like China.

But Samsung's swooping down on Apple's key suppliers could result in higher costs, and that could hinder product launches, according to Reuters. Samsung's collosal in-house supply chain -- displays, processors, memory chips, batteries and other crucial components all come from it -- has provided the company with striking strength in the smartphone wars, Reuters points out.

Yet with Samsung's supplies getting stretched, the smartphone maker has had to seek out other supply options. "The next round of the post-patent battle for them will be over component supplies," said Lee Sun-tae, an analyst at NH Investment & Securities. "Who wins access to the best performing components in class in large quantity - that's the key ... and explains why Samsung is shopping for components more than ever."

Samsung has been purchasing the bulk of its mobile screens from its very own Samsung Display unit, but it did place an order with Sharp -- often an Apple partner -- for high-resolution LCD for its Galaxy products, only to later cancel that order, according to two individuals who requested to not be named considering the negotiations were confidential. Earlier this year, Samsung bought a 3 percent stake in Sharp for $110 million; this week, the Japanese company said it’s looking to increase sales to Samsung, something that could interfere with Sharp’s relationship with Apple, the wire service notes.

Then there's SK Hynix, a chipmaker Samsung has also shown an interest in, and one that Apple has relied on. And another big Apple supplier, Qualcomm, is supplying its chips to Samsung, for the South Korean company’s Galaxy S.

According to industry data, others suppliers whose parts can be found in both Apple and Samsung products include Toshiba Corp. (NAND memory chips), Sony Corp. (image sensors) and Corning Inc. (Gorilla Glass used for iPhones, iPads and Galaxy products, Reuters notes.

Meanwhile, according to research firm iSuppli, STMicroelectronics and Bosch supply  pressure sensors for navigation features for Samsung Galaxy models. Yet Apple could eventually utilize those suppliers as well.

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