Apple may have plans to revamp supply chain

It has been reported that technology giant Apple plans to reduce its reliance on supplier Samsung, after a widely publicized patent dispute between the two smartphone makers strained their relationship.

Apple filed a lawsuit against Samsung in April 2011, claiming Samsung had violated several of its patents. Samsung fired back with its own lawsuit, seeking damages from Apple for the same reason. The jury sided with Apple, which will require Samsung to pay its competitor $1.05 billion, less than the $2.5 billion Apple originally requested. Samsung plans to appeal the verdict and denies any wrongdoing, claiming that Apple is seeking a competitive edge, and the decision may lead to "giant conglomerates" in the technology industry.

Both companies have filed similar suits in other countries, including South Korea, Japan, Australia, Germany, Italy, Britain, France and the Netherlands. In South Korea, a judge ruled that while Samsung did not violate any Apple patents, Apple undermined Samsung's wireless technology.

Intellectual property rights have become a large concern for supply chain operators because technology progresses at such a rapid pace. In the most recent annual UPS Pain in the Chain survey, one-third of executives said these rights were a concern that posed a threat to expansion. In the technology industry especially, companies try hard to keep up with the competition, and it sometimes results in patent infringement and subsequent lawsuits.

South Korean-based Samsung and Apple are bitter rivals, both trying to corner the smartphone market. However, that had previously not stopped Apple from ordering memory chips from its competitor for its iPhone and iPad products. Samsung has been a top Apple supplier, even as both companies battle for the title of the largest smartphone maker in the world.

The Korea Economic Daily report that broke the news claimed Apple will rework its supply chains and reduce orders of Samsung-made memory chips. Instead, the California-based company will reportedly obtain the chips from Toshiba, Elpida Memory and SK Hynix.

Even if Apple does make the move to other suppliers and diversifies its supply chain, it could hurt both companies. Apple is Samsung's largest customer, but Samsung's large network and capabilities would make a shift to new chip manufacturers difficult.

Apple's new iPhone 5, which is expected to be announced next week, may include chips made by suppliers other than Samsung. The company often faces product shortages when its new iPhones are released, and a supply chain switch may trigger even more demand for the latest phone.