That's because the Korean smartphone giant's components division supplies the organic LED screens used as the displays for the 10th anniversary iPhone. Samsung could actually make more money off of the parts used for the iPhone X than it does for one of its own flagship smartphones, according to data from Counterpoint Technology Market Research, the Wall Street Journal reports.
Counterpoint estimated that Samsung will earn about $4 billion more in revenue from iPhone X components than the parts used in the Samsung Galaxy S8 in the 20 months after the iPhone X ships on Nov. 3. Most new smartphones are sold in the first 20 months after they launch.
Samsung also supplies the memory chips used in the iPhone X -- the component that kickstarted Samsung and Apple's close ties. More than thirty years ago, Samsung heir Lee Jae-yong approached former Apple CEO Steve Jobs about supplying flash memory for the iPad Nano, which set the foundation for what is considered an unusual alliance between two otherwise tech rivals.
Samsung's overall business is split into two different divisions -- its products unit and its components division -- a decision that was made in 2011 to address concerns that the components business would leak information about Apple to the products unit, among other reasons. Samsung purchases the parts in its smartphones from its own component division.
Apple has continued to rely on Samsung because it's one of the few manufacturers that can build OLED displays at the scale necessary to support Apple's iPhone demand (estimated at 200 million units per year). Samsung also accounted for 97.7% of OLED screen production in 2016. Samsung is believed to be charging Apple between $120 and $130 per unit for its OLED screens, according to KGI Securities analyst Ming-Chi Kuo, who's built a reputation for correctly predicting many of Apple's moves.
Apple was a part of a Bain Capital-led consortium that made a successful $18 billion bid for Toshiba's memory chip division, which could lessen its reliance on Samsung for that technology. But Apple will likely face some difficulty finding an OLED supplier comparable to Samsung. It was reported that Apple was in talks with Foxconn's Sharp to produce the OLED displays for the iPhone X, but it ultimately went with Samsung for the 10th anniversary device.
Samsung seems to have recognized its dependence on Apple, referring to the tech giant as its "best client," the Journal reported.
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