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Wednesday, November 14, 2012, 10:27 am PT (01:27 pm ET)

Samsung denies rumors of price increase for Apple chip production - report

Contradicting reports out of the Far East are divided on whether Samsung has actually chosen to increase the price of mobile processors for Apple.

An unnamed Samsung official spoke with Seoul-based newspaper The Hankyoreh to deny earlier claims that the company had forced a 20 percent price hike on Apple, as noted by The Street on Wednesday. That disputes an earlier rumor published on Monday by Korean newspaper Chosun Ilbo.

The official reportedly claimed that Samsung's prices "are set at the beginning of the year and aren't changed easily."

The original, now-disputed report cited an unnamed person allegedly familiar with negotiations between the two companies. But Wednesday's report also does not feature a name or direct quote from the unknown Samsung official.

Whether or not Samsung has raised its prices on Apple, there is a growing rift between the two companies as they compete in the smartphone, computer and tablet spaces, to name a few. While Samsung and Apple are bitter rivals, Samsung is also one of Apple's largest suppliers.

Apple's custom-designed chips found on the iPhone, iPad, iPod touch and Apple TV are built by Samsung at its chip fabrication plant in Austin, Tex. There have been claims that Apple plans to move production away from Samsung to Taiwan Semiconductor Manufacturing Co., but so far Samsung remains the sole supplier of custom ARM-based processors for Apple's mobile devices.

Samsung Austin Plant

Samsung's Austin, Texas Plant | Source: Samsung


Last week, yet another unsourced report claimed that Samsung was expecting to lose a portion of its future chip orders from Apple. It indicated that the Korean electronics company may put off construction of a new fabrication facility because of the expected decrease in orders.

If Samsung does in fact increase the price it charges Apple for building its mobile processors, the change is expected to reduce the company's overall margins by as much as 2 percentage points, Gene Munster of Piper Jaffray said earlier Wednesday. Munster also said he would not be surprised if a price increase from Samsung turned out to be true, "given the legal tension" between the two companies.

Apple's battle with Samsung has remained heated, even as Apple has reached licensing agreements with other handset makers, such as a newly announced deal with HTC. In comments publicized this week Shin Jong-kyun, the head of Samsung's mobile and IT division, indicated his company doesn't intend to negotiate a settlement with Apple "at all."

The terms of HTC's settlement with Apple are secret, but market watchers have suggested HTC is likely paying Apple between $6 and $8 for each phone it sells. The deal is predicted to pay $280 million to Apple in a year, an amount that Shaw Wu with Sterne Agee said will be "immaterial" to the iPhone maker, which is projected to secure $48 billion in net income in its fiscal year 2013.