Samsung Creates Department to Build Displays for Apple

The move at Samsung's display unit comes as the two companies work to strengthen their business ties, even as they compete in the global smartphone marketplace.

Samsung display group for Apple products

Samsung Electronics has been assembling a group of about 200 people whose sole responsibility will be to create and build displays for Apple devices, including iPads and MacBooks. The creation of the new Apple display team at Samsung Display Co. comes as the two companies work to strengthen their business ties and will only share information about the department within the group, according to an April 15 report by BloombergBusiness.

The special Apple display team started up on April 1 and also helps with sales, people with direct knowledge of the matter told BloombergBusiness, according to the report. The move by Samsung comes as the company "is relying more on its display and semiconductor units after falling into a tie with Apple for leadership of the global smartphone market," the article said. "Relations between the companies thawed after they dropped all [earlier patent-infringement] lawsuits against each other outside the U.S., and Apple is now the biggest external customer for Samsung components, one of the people familiar said."

Samsung and Apple had been at odds in courtrooms around the world in recent years as they filed lawsuits and countersuits against each other, alleging that they had violated patents held by one another in some of their most popular smartphone models. Eventually, the two companies dropped their claims against each other to end what had become a huge and potentially much more costly legal battle.

Jerry Kang, an analyst with research firm IHS, told BloombergBusiness that the new Apple-focused display team created by Samsung "implies that the relationship between Samsung and Apple has improved. This also suggests that Samsung Display will win screen orders from Apple, such as for the Apple Watch," he added.

Samsung has also been developing a closer relationship with Apple in the semiconductor market, as the company builds Apple's A9 processor chips at a plant in South Korea for the next iPhone model, sources told BloombergBusiness. The new deal brings back business for Samsung that had previously been lost to Taiwan Semiconductor Manufacturing Co., the article said.

The fresh Apple display and semiconductor business is good news for Samsung, which continues to battle its way back from several tough financial quarters. Samsung's latest first-quarter estimates show operating income that was lower than the same period a year ago, but higher than the average estimates from 36 financial analysts. The company released the estimated first-quarter figures on April 7 as a preview in advance of its full quarterly earnings report, which is due later this month.

Samsung's operating income for the quarter fell 31 percent to about $5.4 billion (5.9 trillion South Korean won) in the first quarter ending March 31. That figure was higher than the 5.5 trillion won that was expected by the 36 financial analysts. At the same time, Samsung's sales are expected to fall some 12 percent in the quarter, compared with the same period one year ago.

Samsung has been hard hit the last several quarters by lower sales of its mobile phones, which have been giving way to cheaper phones from Chinese handset makers, and from stiffer competition from Apple and its latest iPhone 6 smartphones and from other competitors, according to earlier eWEEK reports. Much of the sales slump likely was due to consumers who were waiting to see the then-new iPhones and Samsung's own replacement for its then-flagship Galaxy S5 phone.

The company is hoping for a big financial turnaround in the near future as its all-new, redesigned and flashier flagship smartphones, the Galaxy S6 and the Galaxy S6 Edge, went on sale to consumers in 20 countries, including the United States, on April 10 after almost two months of intense build-up in the marketplace.

The new Galaxy S6 and Galaxy S6 Edge smartphones are selling so well and have been attracting so much consumer interest and so many preorders that the company is already boosting its production targets for the new devices. Instead of producing 7 million Galaxy S6 and S6 Edge devices in April, Samsung has placed orders for an extra 1 million units, boosting its order to 8 million smartphones for the month, according to earlier reports. Samsung had previously said it had ordered 5 million of the smartphones for March, bringing the total production for the two months to 13 million phones.

The new Galaxy S6 smartphones have been well-received so far, giving some credence to Samsung's hopes that they will hit the mark when it comes to taking on the iPhone 6 and the iPhone 6 Plus around the world. The improvements in the new S6 smartphones over the previous Galaxy S5 model are many and range from a chassis made of aircraft-grade aluminum to a higher-resolution 5.1-inch, quad HD Super AMOLED (Super active-matrix organic LED) display, Samsung's latest eight-core 64-bit Exynos 7 processors, and new LPDDR4 flash RAM and non-expandable UFS 2.0 flash storage that will be available in three capacities: 32GB, 64GB and 128GB.

A successful launch for the new Galaxy smartphones is very important for Samsung as it continues to battle its way out of its slump. Late last year, Samsung revealed that it would pare its model line and cut production costs to better compete, according to earlier eWEEK reports.