Apple is making Samsung pay, and it we’re not just talking about patent lawsuits. The Wall Street Journal reports that Samsung’s component supply business has taken a big hit recently because Apple has decided to branch out and use a wider variety of suppliers to cut down its dependence on the Korean electronics giant. While Apple has had mixed results in finding new supply chain partners and has even had to reportedly crawl back to Samsung on some occasions, the big picture is that Apple’s moves are still taking a bite out of Samsung’s bottom line.
Business Insider’s Jay Yarow does a nice job of breaking down just how damaging Apple’s moves to diversify its suppliers have been to the profitability of Samsung’s chipset business.
“As a result of Apple’s switch, Samsung’s chip-making business is expected to have an operating loss this year of 877 billion won, or ~$851 million,” Yarow writes. “That would be down from an operating profit of 203 billion won, or ~$197 million, last year, according to The Wall Street Journal.”
Taken together, that represents a swing of about $1.048 billion in just a year, a huge chunk of which can be attributed to the loss of Apple’s business. While Samsung as a whole is still a hugely profitable company, this latest development is just another reason for it to feel a little bit nervous going forward.