Samsung is most definitely not in Apple’s good books following their defeat in a California court last month, and now the two appear to have fallen out over pricing for the Samsung memory chips Apple uses in its iPhone, with Apple replacing the memory chips and screens with non-Samsung products in its first batch of iPhone 5 smartphones.

The first batch of new iPhones, expected to launch this month, will not include memory chips or displays supplied by Samsung, according to reports.

Bloomberg writes that its unnamed source revealed that the switch is due to a because of a disagreement about pricing.

However, Apple will still be using the A-series of processors from Samsung to power the device expected to launch on 12 September, and according to Reuters sources, Samsung still remains on the list of suppliers for the new iPhone.

Reuters sources claim that the reasoning behind the move has nothing to do with the Apple verses Samsung patent dispute. Instead, it is in line with Apple's plan to diversify its supply chain.

Seoul-based NH Investment & Securities Co analyst Lee Sun Tae told Bloomberg: “Apple doesn’t like to be dependent on Samsung - there’s no question about it.” However, they added: “There’s only so much volume Apple can get from other vendors. They will probably have to come back to Samsung later on.”

However, The Wall Street Journal suggests that the reason behind the switch is the escalating disputes between the two technology giants. Daishin Securities analyst John Park told them: “Apple started to lessen its dependence on Samsung for components since the latter half of last year when the two were fighting to win the spot for the world's largest provider of smartphones. But Apple's move to diversify its component vendors likely accelerated since early this year when the Apple-Samsung patent litigation escalated."

According to research by Sanford C. Bernstein, the new screen technology in the new iPhone will be provided by LG, Sharp and Japan Display KK, reports Bloomberg. The smaller screens that will appear in the iPad mini when it launches in October will come from AU Optronics and LG, according to that report.  

According to a Korean Economic Daily report (via Apple Insider), Toshiba, Elpida Memory and SK Hynix will provide the memory chips.

Earlier this year when Apple was reported to have secured chips from Elpida, the news wiped $10 billion of Samsung’s market cap.

According to Bloomberg data, Apple is Samsung’s largest customer, accounting for 9% of its revenue.

Samsung is the manufacturer of the A-series of processors – the A4 and A5 chips that Apple designs in-house and uses as the heart of the iPad and iPhone.

Gartner estimates that Apple will spend around $2.1 billion on these A-series chips this year.

DigiTimes has previously reported that Apple is tied into a contract with Samsung regarding the A6 processor, and won’t be able to drop its chip orders until 2014.

The Apple versus Samsung trial could cost Samsung far more than the $1bn the company is supposed to pay Apple for infringing its patents. 

Follow Karen Haslam on Twitter / Follow MacworldUK on Twitter 


Apple contract worth $2.1 billion to Samsung this year

Loss of Apple chip contract sees Samsung value decline

Qualcomm chip shortages - could limit iPhones, iPads

Apple props up Asian supply chain