Samsung plans to terminate LCD supply contract with Apple

Samsung announced on Monday that it would terminate the existing contract with Apple and will no longer ship liquid crystal display panels, ending a longtime partnership between the two companies, The Korea Times reported on Monday. Citing an unnamed Samsung official, the report revealed that Samsung has already cut its portion of shipments to Apple, and beginning in 2013 it will stop shipping LCDs to Apple entirely.

The Korean electronics maker apparently plans to offset the loss of Apple as a customer by selling more displays to its own handset division, as well as retailer Amazon, which sells the Kindle Fire HD tablet.

The change will represent a major shakeup in Apple's supply chain, as the iPad maker bought more than 15 million LCDs from Samsung in the first six months of 2012. That made Samsung the largest LCD supplier to Apple, topping LG Display's 12.5 million screens and Sharp's 2.8 million.

However, Samsung reportedly shipped less than 3 million LCDs to Apple in the third quarter of 2012. In the current fourth quarter, Samsung's shipments are expected to drop to just 1.5 million.

Earlier this year, Samsung was said to be the only company that could produce high-resolution Retina displays for Apple's third-generation iPad. While Samsung was the only Retina display provider at the device's launch, LG and Sharp eventually joined in Apple's supply chain.

The relationship between Samsung and Apple has been unique, as the two companies are fierce competitors while Samsung has also been the largest supplier of components to Apple. Tensions between the companies boiled over last year, when Apple sued Samsung and accused the company of copying the look and feel of the iPhone and iPad. Since then, the number of lawsuits has proliferated across the globe.

Samsung's apparent plans to cease shipping LCD screens to Apple comes soon after a rumor indicated that Apple has become more "serious" about moving chip production away from Samsung. The custom chips found in Apple's iPhone, iPad and iPod touch are built by Samsung in Texas, but Apple plans to move production away from Samsung, potentially handing chipmaking responsibilities over to Taiwan Semiconductor Manufacturing Co.