Samsung Poised to Make Billions Off iPhone X Parts

October 3, 2017

Yes, you read that headline right.

Samsung is on course to make nearly $4 billion more in revenue making parts for the new iPhone X rather than the parts it makes for its flagship mobile device, the Galaxy S8, according to analysis and projections by Counterpoint Technology for The Wall Street Journal.

The figure comes from projected sales over 20 months, as that chosen time window is when the majority of sales for a new phone occur. Counterpoint expects the iPhone X will sell 130 million units, while the S8 will sell 50 million.

Each iPhone X sold will net Samsung $110 from included components, while each S8 sale will bring $202 to Samsung. These numbers are a mix of parts sales from Samsung Electronics along with two other Samsung affiliates that produce batteries and capacitors.

Every single iPhone X requires a few key parts that only Samsung or its affiliates can make. This includes the OLED screen and the NAND flash memory chips, for both of which Samsung is the only reliable major producer.

The close and success-reliant relationship the two companies share is one of the oddest in business, as Samsung and Apple are the two largest smartphone creators in the world and constantly in direct competition. The partnership between the two companies can allegedly be traced back more than a decade to when the grandson of Samsung’s founder personally brokered a deal with Steve Jobs to provide flash memory for iPods.

“At meetings, Samsung executives are known to tell attendees who pull out iPhones: ‘It’s OK. They’re our best client,’ according to people familiar with the matter,” writes the Wall Street Journal.

The analyst claims the price of the OLED screens is entirely controlled by Samsung, which could have led to the thousand-dollar price tag for the iPhone X. Apple is doing their best to remedy the parts monopoly held by Samsung by encouraging competition with other companies. Apple (among a couple other investors) even acquired Toshiba’s NAND flash chip plant for close to $18 billion.