An intensifying legal battle between Samsung Electronics Co and Apple Inc is expected to crimp growth at one of the fastest--growing businesses of the South Korean company, while threatening to worsen business ties with the firm’s largest customer.
The two technology firms have been locked in an acrimonious global battle over smartphone and tablet patents since April and Apple has successfully blocked Samsung from selling its latest tablets in Germany and some smartphone models in the Netherlands.
The iPhone and iPad maker has also forced its rival to indefinitely delay launching its new Galaxy tablets in Australia, where a court will give its ruling this week.
Lawyers from Apple and Samsung argued their cases at a hearing in Australia yesterday. Apple has sought an injunction in Australia to ban sales of Samsung’s Galaxy 10.1 tablet, asserting three patents have been infringed.
Another hearing is set to resume on Thursday.
Another loss could dent Samsung’s ambitious attempt to close the gap with Apple in the global tablet market. The Galaxy gadgets, powered by Google’s Android operating system, are seen as the biggest challengers to Apple’s mobile devices.
“Samsung’s tablet business will be most affected and its chip business will also take a hit as Apple moves to diversify away from Samsung to the likes of Toshiba,” said Nho Geun-chang, an analyst at HMC Investment Securities. “But taking passive steps for fear of losing its biggest customer will slow down strong growth momentum at its telecoms business, which Samsung doesn’t want to see as the business is set to become the biggest earnings generator this year and make up for weakening chip profits. It’ll be a costly battle for Samsung.”
The South Korean conglomerate supplied Apple with about US$5.7 billion in components last year, some 4 percent of Samsung’s total sales.
Apple’s portion grew to 5.8 percent of Samsung’s sales in the first quarter, driven by booming iPad and iPhone sales, for which Samsung supplies chips, along with Japan’s Toshiba.
Analysts said what might become a longer-term challenge for Samsung is losing chip orders from Apple.
“For Samsung, [the] biggest concern is reduced order[s] from Apple. Without Apple’s big backing, it would be difficult for Samsung to boost its chip market share sharply,” Nho said. “Apple is leveraging the fact that it’s got alternative suppliers. They may offer inferior or more expensive components, but it’s something consumers barely notice and something Apple can successfully use to pressure Samsung.”
Samsung and Apple are suing each other in nine countries over 20 cases. Apple fired the first salvo in April by suing Samsung in a California court, saying the Galaxy lineup devices infringed on its mobile technology patents and design.
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