While Samsung continues to buy the majority of its components from its own subsidiaries, such as Samsung Display, increasingly it is looking elsewhere for parts such as screens, sensors and chips. Inevitably this means that the South Korean company is sourcing components from the same firms that have traditionally sold to Apple.
One of these is Sharp. The Galaxy range was originally to feature LCD screens made by Sharp, before that deal fell apart, possibly due to Sharp's strong existing relationship with Apple. Since then, however, Samsung has bought a three per cent stake in Sharp, which this week expressed its interest in doing more business with the Korean smartphone vendor.
Further reading
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Samsung is now the world's largest smartphone maker, and its financial muscle is allowing it to cut new deals with other manufacturers that also supply parts to Apple. Toshiba, supplier of NAND chips, is one; Corning, manufacturer of toughened glass screens, is another. Not that the traffic is all one way: according to research firm iSuppli, Apple is becoming interested in the sensors made by Bosch and STMicroelectronics, which power the navigation features in Samsung Galaxy devices.
In the chip market the two giants are also increasingly hunting in the same territory. Samsung S4 phones sold in the US are powered by Qualcomm chips rather than the Exynos 5 Octa processor used in South Korea and Europe. The Galaxy range also features chips by Qualcomm, which is a major Apple supplier.
"We'll continue to resort to multi vendors to ensure smooth supply," said Kim Hyunjoon, vice president of Samsung's mobile business, on a recent earnings call.
Increased competition for components could lead to price rises. It could also cause product launches being delayed, which can be a major blow in a field as competitive as the smartphone and tablet market. HTC was forced to delay the full launch of its flagship smartphone the HTC One in March due to a shortage of cameras. Analysts say that this has led to poor financial results for the Taiwanese firm, which is increasingly lagging behind the competition.
"Any disruption in even small parts that you wouldn't think are really core, say headphones, can affect product launches," said Lee Sun-tae, an analyst at NH Investment & Securities, according to Reuters.
As supply chains overlap to a greater degree, device manufacturers will find it harder to differentiate their products on hardware alone. Some reviewers have pointed out that advances in the Samsung S4 owe more to software than the underlying hardware platform.
