Is Apple Trying to Cut Ties With This Smartphone Competitor?
Reports of Apple (NASDAQ:AAPL) placing large chip orders with Elpida Memory may only signify the company’s attempts to diversify its supply partners and not affect the larger chip market, analysts say. Taiwanese trade news outlet DigiTimes said on Wednesday that Apple had placed “huge orders” for memory chips with Elpida, a Japanese manufacturer. The orders were supposedly for the iPhone and iPad.
That report led to shares of Samsung, also a chip supplier, to fall drastically. The stock of Micron Technology (NASDAQ:MU), which is in the process of acquiring Elpida, rose on the report, but is down again on Thursday morning.
But analysts say any such move by Apple (NASDAQ:AAPL) would only be to strengthen its own supply chain and would have a limited impact on the larger chip market, and consequently Samsung. Samsung controls more than half of the global mobile DRAM market.
“No company wants to have just one supplier,” Pacific Crest analyst Monika Garg told Reuters. “Just on that basis I think they’re probably just shifting the DRAM balance, looking for equilibrium between two or three suppliers. I don’t think Apple would want to spoil their relationship with Samsung. They are their foundry.”
Apple sold 35.1 million iPhones last quarter and some believe it could possibly be facing supply constraints that it is trying to fix. “Apple has been diversifying its suppliers and the deal with Elpida had no major impact on other major suppliers as Elpida’s share of the global mobile DRAM market is quite small,” one source with knowledge of Elpida’s sales breakdown told Reuters.
Apple is Samsung’s largest customer of chips and displays, but the two are also strong competitors in the smartphone and tablet market.