Apple sees manufacturing costs rise Samsung Electronics, which provides technology giant Apple with the processing chips that power its iPhone and iPad, has raised the prices on these critical components. Although Apple designs the chips for use in its popular products, Samsung has been one of the company's main manufacturers for a variety of parts used in Apple gadgets.

No official announcement has been made as to why Samsung has raised the price of these chips by approximately 20 percent, therefore, it is unknown if Samsung's manufacturing costs have increased or if the direct material cost for the chips has been raised. However, there is speculation that the increase could be a result of the lawsuits the companies have filed against each other across the globe in regard to patent violations and licensing disputes.

Manufacturing changes could be coming
Despite the ongoing battles the two companies are locked in, Samsung is still contractually obligated to supply Apple with the chips until 2014. However, recent rumors suggest that Apple has already begun searching for new suppliers, reaching out to companies such as AUO and LG Display to start producing some of its components for the iPad and iPad, according to TechEye.

There are other options for Apple's manufacturing process besides outsourcing component production to other companies. There has been speculation that the company may move some it its production in-house in the near future, which could result in significant cost savings for Apple. By not having to pay an outside enterprise to manufacture the essential parts used in the company's most popular products, the corporation could see a reduction in spending with an in-house manufacturing operation.

With in-house manufacturing services, the company also has the potential to streamline its processes and supply chain. By cutting component manufacturers out of the picture, Apple could benefit from a simplified supply chain and easier-to-manage logistical operations.

For the time being, it appears that Apple is sticking with its outsourced component manufacturing, even if future deals will exclude rival Samsung. Both companies have refused to comment on the price increase for the necessary chips, but according to MarketWatch, an anonymous source claimed Apple has accepted the higher cost for the products. However, to cut costs in the future, the company may indeed change its suppliers or develop in-house manufacturing operations.
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