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I think there's three big reasons. Reason #1: Apple has 243.7B in cash right now. That'll already push them to nearly Samsung's valuation. Reason #2: Samsung'

by temuze 8y ago

I think there's three big reasons. Reason #1: Apple has 243.7B in cash right now. That'll already push them to nearly Samsung's valuation. Reason #2: Samsung's business is more vulnerable. Most of their profits came from the chips division: https://money.cnn.com/2017/07/27/technology/samsung-profit-apple/index.html https://money.cnn.com/2017/07/27/technology/samsung-profit-a... Samsung sells components to many companies, including Apple. In fact, Samsung makes more money from iPhone than they do from the Galaxy S8: https://www.theverge.com/circuitbreaker/2017/10/2/16404430/samsung-iphone-x-galaxy-s8-screen-components-money-revenue-display https://www.theverge.com/circuitbreaker/2017/10/2/16404430/s... As an OEM, Samsung has a much more vulnerable moat. What happens when Apple starts to make those components on their own? They already started doing it with processors. What about memory? They buy a ton of memory from Samsung. Reason #3: reality distortion field :)

tooltalk 8y ago
#1, so you agree that it is undervalued? #2, Samsung's business is diversified, not vulnerable. During the DRAM glut years ago, the mobile division's higher profit helped cushion their chip division's lower profit. Now, it's the other way around. Also, unlike Apple's reliance on a single product line, their mobile sales come from many different models, greater than the sales of Apple's in aggregate, but, as individual models, lower than that of Apple iPhone. CNN's comparison likewise is nonsensical. Apple accounts for about ~3 or 4% of Samsung's overall sales last I checked. Apple has significantly cut their reliance on Samsung, especially after the legal battle started in early 2012's, and stopped using Samsung's parts before -- for instance, the earlier iPhone Ax chips were designed and manufactured by Samsung in Texas, USA, but now Apple designs them in-house (after PA-semi and Intrinsity acquisition in 2008 and 2010) and outsources manufacturing to Taiwan/China. That was about 6 years ago and Samsung is still laughing their way to the bank with about $50B in profit last year. #3, I've too noticed that a lot of Apple fanbois are out of touch with the reality at times (is that what you call reality distortion field?). Congrat Apple for achieving such huge milestone and I love my MBP which is 6 years old and still going strong, but surely, no sane mind would believe that Samsung would be out of business (or vulnerable) without Apple.
- earenndil 8y ago
  > outsourced manufacturing to Taiwan/China Actually, it's 50/50 chips produced by TSMC (taiwan semiconductor) and samsung.
  - tooltalk 8y ago
    That was years ago when Samsung was on 14nm (vs TSMC's 16nm). Apple completely moved all US based A chips manufacturing to Taiwan.
KaoruAoiShiho 8y ago
#1 is a good point. Samsung's cash pile is $40 billion, decent but quite a bit smaller. Apple should be worth more than Samsung, just the size of the difference seems a bit out of step. About this moat. A fab is not exactly a shoe, it's not something that anyone can just do. The idea that Apple would make their own memory is out there. Apple still uses TSMC or Samsung to make their SoCs, and will have to keep paying those companies for that. Designing the chips is relatively low cost in comparison. Apple cannot easily just make their own. I mean this stuff is advanced technology, it's at least harder than switching from iPhone to Android. People talk a lot about the wall garden and how that prevents switching but this moat is theoretical, it's never been tested. Apple has been good about keeping pace or in front of the competition hardware wise. For a company making good products it deserves the profits, but if it falls behind I don't expect the "moat" to save it. Majority of apps people use are free and are cross-platform. There are only a handful of relevant apps like iMessage or Sketch that are truly apple exclusive. Mac sales have been declining recently and I personally use 5 platforms, linux, mac, windows, ios, android and have no major problems. #3 :)
- tooltalk 8y ago
  just to nitpick, Samsung's cash pile as of June 2018 is $83B, but once you combine all forms of assets (ie, inventories, PP&E, etc) it comes out to about $300B. Apple doesn't have large PP&E (their datacenters aren't worth much) and other forms of assets. Samsung made $50B in profit last year, but it also has much greater R&D and CapEx than Apple.

by temuze 8y ago

tooltalk 8y ago

#1, so you agree that it is undervalued? #2, Samsung's business is diversified, not vulnerable. During the DRAM glut years ago, the mobile division's higher profit helped cushion their chip division's lower profit. Now, it's the other way around. Also, unlike Apple's reliance on a single product line, their mobile sales come from many different models, greater than the sales of Apple's in aggregate, but, as individual models, lower than that of Apple iPhone. CNN's comparison likewise is nonsensical. Apple accounts for about ~3 or 4% of Samsung's overall sales last I checked. Apple has significantly cut their reliance on Samsung, especially after the legal battle started in early 2012's, and stopped using Samsung's parts before -- for instance, the earlier iPhone Ax chips were designed and manufactured by Samsung in Texas, USA, but now Apple designs them in-house (after PA-semi and Intrinsity acquisition in 2008 and 2010) and outsources manufacturing to Taiwan/China. That was about 6 years ago and Samsung is still laughing their way to the bank with about $50B in profit last year. #3, I've too noticed that a lot of Apple fanbois are out of touch with the reality at times (is that what you call reality distortion field?). Congrat Apple for achieving such huge milestone and I love my MBP which is 6 years old and still going strong, but surely, no sane mind would believe that Samsung would be out of business (or vulnerable) without Apple.

earenndil 8y ago
> outsourced manufacturing to Taiwan/China Actually, it's 50/50 chips produced by TSMC (taiwan semiconductor) and samsung.
- tooltalk 8y ago
  That was years ago when Samsung was on 14nm (vs TSMC's 16nm). Apple completely moved all US based A chips manufacturing to Taiwan.

KaoruAoiShiho 8y ago

#1 is a good point. Samsung's cash pile is $40 billion, decent but quite a bit smaller. Apple should be worth more than Samsung, just the size of the difference seems a bit out of step. About this moat. A fab is not exactly a shoe, it's not something that anyone can just do. The idea that Apple would make their own memory is out there. Apple still uses TSMC or Samsung to make their SoCs, and will have to keep paying those companies for that. Designing the chips is relatively low cost in comparison. Apple cannot easily just make their own. I mean this stuff is advanced technology, it's at least harder than switching from iPhone to Android. People talk a lot about the wall garden and how that prevents switching but this moat is theoretical, it's never been tested. Apple has been good about keeping pace or in front of the competition hardware wise. For a company making good products it deserves the profits, but if it falls behind I don't expect the "moat" to save it. Majority of apps people use are free and are cross-platform. There are only a handful of relevant apps like iMessage or Sketch that are truly apple exclusive. Mac sales have been declining recently and I personally use 5 platforms, linux, mac, windows, ios, android and have no major problems. #3 :)

tooltalk 8y ago
just to nitpick, Samsung's cash pile as of June 2018 is $83B, but once you combine all forms of assets (ie, inventories, PP&E, etc) it comes out to about $300B. Apple doesn't have large PP&E (their datacenters aren't worth much) and other forms of assets. Samsung made $50B in profit last year, but it also has much greater R&D and CapEx than Apple.