Apple recently released their new 10 year anniversary model of the iPhone, the iPhone X. It’d be reasonable to assume that Samsung, their biggest competitor, is hoping it flops. Yet Samsung could make more money from iPhone X sales than they do off their own phones. How?
Samsung have cornered the market of OLED displays. For every iPhone X made, Samsung pockets $120. Compare this to the iPhone 7 Plus, on which they made around $45 per LCD screen, and the power of Samsung’s dominance is clear. Apple, keen to maintain strong profits, have pushed this onto the consumer: it’s no coincidence the new iPhone costs a whopping £1000.
To overcome Samsung’s dominance Apple have begun investing in Samsung’s only rival in the market, jump-starting the competition with a $2 billion investment in LG Displays. Google, following suit, has invested $800 million.
The complexity of this situation deepens when one considers the relationship between Apple and Samsung. Since 2010, the two companies have been locked in a legal war over Samsung’s alleged copying of the original iPhone design. While this drawn out legal battle has cost Samsung over $150 million, Apple will give billions to its arch-rival for parts in the next couple of years.
The iPhone X captures the tech industry in all its messiness. Apple and Samsung are enemies, but Apple needs Samsung and Samsung profits from its rival’s success. At the end of the day, these enormous companies really need each other.
Economists can consider how massive corporate structures create increasingly complex and sometimes paradoxical relationships. They might also consider how monopolies are allowed to form, and what might stop them. HSPS students and Politics students can consider the impacts of globalisation on supply chains and the new era of mega tech companies.
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