Apple and Samsung are fierce competitors in the smartphone market, but Samsung stands to be a winner even if Apple’s iPhone X outsells Samsung’s Galaxy S8 variants, according to Timothy W. Martin and Tripp Mickle in The Wall Street Journal. They write that Samsung “…stands to make billions of dollars supplying screens and memory chips for the highest end new iPhone….”
They cite analysis conducted by Counterpoint Technology Market Research for the Journal estimating that Samsung will earn about $4 billion more in revenue from making parts for the iPhone X than from making parts for the Galaxy S8 in the 20 months after the iPhone X goes on sale.
Martin and Mickle write that Counterpoint expects Samsung to earn $110 on each of 130 million iPhone X devices sold through the summer of 2019, while component sales will earn Samsung $202 for each of 50 million Galaxy S8 devices sold over the same period.
They quote David Yoffie, a professor at Harvard Business School who has studied Apple and serves on Intel Corp.’s board, as saying, “These are two of the largest companies on the planet deeply tied at the hip and directly competitive. That makes this stand out compared with almost any relationship you can think of.”
Martin and Mickle report that a popular codename for Apple among Samsung employees is “LO,” for “Lovely Opponent.” The relationship between the companies has not always been lovely, however. Apple filed a patent-infringement lawsuit against Samsung in 2011; the lawsuit remains unresolved.
In addition, Apple is trying to diversify its supply chain, Martin and Mickle report. It is encouraging other companies to build OLED production operations, and it is supporting Bain Capital’s bid for Toshiba’s memory business.