The suggestion was that the relationship is mutually beneficial, not that it was bi-directional in terms of components traded.
Apple is like the USA to Samsung's China in this specific relationship in that the product (components in this case) pretty much goes one way, but both still rely on the relationship.
Samsung makes some of the components Apple needs, Apple buys those components. Apple needs Samsung for inexpensive chip fab, Samsung needs Apple for the revenue provided in return.
It's not a matter of needing each other. As long as there's a positive NPV on working together, they'll do it. They each might say, "We benefit X, but there's a risk that costs Y." As long as X is greater than Y, they'll work together. They don't have to, but as long as they're the best partners for a given transaction, why not?
"need" may not have been the be the best word to use there. I didn't mean to imply that either needs the other by the strictest sense of the word. I meant it more in the sense of "I need my morning coffee". I don't really need it, but I'd, you know, really, really like to have it.
I think you are overestimating how much Samsung needs Apple as a customer. Gigantic companies as Samsung are simultaneously active in any number of large markets. They do not need single customers, they do not even need whole markets. They are essentially investment holdings that will move out and into markets as they mature or are commoditized.
And if Samsung unilaterally ends their relationship with Apple it sets a dangerous precedent. If you knew that your trading partner would end their sale of products to you because you had a (valid or invalid) suit against one division of their business or had a product suite that competed with one of their division's product suites, would you want to do business with them or would you find someone that can actually play well with others?
How would you determine whether or not that was true about the next company? What about business that is ended between companies due to overlapping interests? That happens all the time.
Those were outside the hypothetical that was proposed (namely that Samsung could give up Apple as a customer and not notice it - presumably meaning longterm). Sure companies end relationships when they have overlapping interests, but sometimes they prop each other up as a result of that as well - see Microsoft's support of Apple in 1997, monetarily and with product support. It was apparently to their benefit to support a (failing) competitor, in this case I'm guessing it was to do with the anti-trust charges. But they were competitors at the same time.
In this particular case though (Samsung/Apple) the overlapping interest is part of Apple's core, and just one of many Samsung divisions. It would not be (or at least it's not obvious that it would be) in Samsung's interest to poison the well of their component division just because it happens that their phone division competes with Apple. Ditching Apple may not, on its own, be an issue after a couple years, but it would put other component customers on edge. See the concern some Android phone manufacturers had when Google bought Motorola's mobile division for a similar issue but from the software side.
The two businesses that Samsung is in that are making almost all of their money right now are semiconductors (and only flash and SOCs) and mobile handsets. Take those two businesses away and Samsung starts to look more like the ponderous, government-sheltered behemoth that it is.
And someone is going to take away the handset business - everyone in asia is basically waiting for Huawei and ZTE to eat Samsung's lunch. Samsung can't compete with either of them on cost, and eventually they won't be able to pump more pixels into 400+ppi screens to keep customers from buying cheaper smartphones. And without unique software to offer consumers (like Apple), Samsung is extremely vulnerable in the handset market.
And in the meantime, Samsung is amortizing a fortune's worth of chips fabs that were mostly built to supply components for iDevices.
I think it's a bit more nuanced than you are making out.
Samsung do have their own Software (Tizen, and Bada(?), and a third 'unknown' base). They are pushing for an Android compatible linux, with strong hardware integration. Huawei and ZTE won't be able to compete with that. They could fail completely on that strategy, but they are doing more than just increasing PPI.
Neither Tizen nor Bada are realistic competitors for Android outside of Korea. Certainly not anymore than Meego was an Android competitor - and Nokia actually had a lot of really great software engineers working for them. That's something that's hard to say about Samsung considering Touchwiz. And neither Bada nor Tizen has any significant ecosystem of apps.
This isn't a competitive edge against Huawei and ZTE because no one buys Samsung phones for their software.
Tizen can run android apps. So they have the largest ecosystem. Samsung has a huge brand, they could easily make Tizen a competitor by deploying it on Galaxy Phone in the future. Consumers wouldn't know (or care).
Not sure how you can judge a whole companies software engineers, based on one project (Touchwiz).
Tizen can run android apps. So they have the largest ecosystem.
No they don't. Android has the largest ecosystem. They're riding on Android's train - they don't have their own train. And they're on the Android train with Huawei. And if they're dumb enough to jump off the train, then they're in the bushes.
Samsung has a huge brand, they could easily make Tizen a competitor by deploying it on Galaxy Phone in the future. Consumers wouldn't know (or care)
No they couldn't. Brand doesn't count for anything if you're selling the same stuff your competitor is. Substitutability. The top phones from Apple, Samsung, and HTC offer more for more money than what Huawei can offer right now because there's room for mobile hardware innovation, and that's what they do best. Once they hit a ceiling - no more pixels to add to the screen, no more transistors on the CPU without exceeding a reasonable thermal envelope - then its all Huawei's game. The only one of those three that stands a chance is Apple because they have their own ecosystem.
Samsung has more brand recognition than Huawei. And it doesn't matter a whit. They'll still get steam-rolled once the ppi wars are over and we're buying based on price. This is the grim reality that Samsung shareholders have been realizing.
Not sure how you can judge a whole companies software engineers, based on one project (Touchwiz).
I've owned many Samsung products and have had no good experiences with their software or drivers. I'm willing to be convinced otherwise, but so far they seem to fit the stereotype of the hardware-company-that-doesn't-get-and-can't do-software.
They buy lots of chips and components from a company that's invested a lot of money to supply that demand. If Apple abruptly stopped or was forced to stop buying flash from Samsung, for example, Samsung would take a bath on their fab investments. Apple is easily their single biggest customer for flash and SOC fab production.
No, but there is evidence suggesting that they are about to partner with GlobalFoundaries, who is building another new fab in NY, supposedly for Apple demand.
