Apple, Samsung 'Best Frenemies Forever' Following New Chip Deal, Says This Analyst
As top supplier to Apple, Samsung will be displacing Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE: TSM) who currently manufacture most of the chips for Apple devices.
According to Korea Times, the new arrangement will be worth "billions of dollars" for Samsung.
In a note to clients Monday evening, Robert Maire of Semiconductor Advisors described the relationship between Apple and Samsung as "best frenemies forever," although the deal may not be that attractive for Samsung who recently reported "horrible" smart phone numbers.
"We would assume that given Apple's track record of how it treats suppliers coupled with Samsung's dire predicament that Apple likely got a better than sweetheart deal," Maire wrote. "We imagine that pricing has to be very attractive and aggressive with Apple likely dictating most supply terms."
As a side note, Maire adds that Taiwan Semiconductor can actually benefit from the deal. The analyst notes that there are plenty of customers, especially Qualcomm, who are "desperate" for leading edge capacity.
It is possible that Taiwan Semiconductor is better off by walking away from Apple's business as it is a "safe assumption" that the company can get much better margins through deals with Qualcomm and other firms.
"Maybe this was a win for Taiwan Semiconductor and a loss for Samsung," Maire speculates.
Shares of Apple closed Monday at $113.99.
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