Apple and Samsung are global leaders in consumer electronics. With a market cap of over $3 trillion, Apple Inc. (AAPL) has a book value the likes of which no corporation has ever seen. After taking over Exxon Mobil Corp. (XOM) as the largest corporation in the world by market cap in 2011, Apple has rarely forfeited this position.
Meanwhile, in South Korea, Samsung isn’t a company so much as it is a vast conglomerate dwarfing everything in its path. By some estimates, Samsung is responsible for over 22% of that nation’s gross domestic product (GDP).
The conglomerate’s main subsidiaries include a colossal life insurance arm, construction, and shipbuilding businesses, but far and away, one of its biggest moneymakers across the globe is also its best-known: Samsung Electronics.
Key Takeaways
- Valued at over $3 trillion, Apple is the largest company in the world by market capitalization as of December 2023.
- Samsung, with a market cap of over $374 billion, is another global powerhouse. The company makes up over a fifth of South Korea's GDP.
- The bulk of Apple's sales is from its iPhones. Though Samsung's smartphones account for the largest portion of its sales, the bulk of its operating profit comes from its semiconductor business.
Phoning It In
In 2022, Apple sold $394 billion worth of phones, computers, tablets, and related devices. iPhones made up over half of net sales, followed by MacBooks and iPads.
By comparison, Samsung witnessed $246 billion in revenues in 2022. Samsung Electronics, and that’s the entity we’ll be referring to as “Samsung” throughout the remainder of this article, is not merely an Asian analog to Apple. Samsung has two primary divisions: device experience and device solutions.
If those sound like synonyms, they aren’t. Device experience in this context means mobile, computers, TVs, kitchen appliances, air conditioners, and washing machines. These indeed include the cell phones and tablets that are traditionally associated with Samsung, at least in North America. "Device solutions" refers to semiconductors, integrated circuits, LED panels, hard drives, and other components, rather than standalone devices.
Huge Margin on iPhones
Apple makes money on iPhones and MacBooks, more than anything else. The phones outsell the laptops by far, but the massive margins on the latter make the race more or less a wash.
Samsung’s profit center tells a different story. In 2022, 52% of operating profit was driven from its device solutions division, which focuses on semiconductors. Next in line was its device experience segment that covers mobile, computers, and home appliances. This division made up almost 30% of operating profit in 2022.
Samsung might beat Apple on market share for mobile phones (20% versus 16% as of Q3 2023), but Apple happily sells fewer phones than Samsung given that its profit margins on each phone sold are higher.
Apple's gross margin as a percentage of revenue in Q4 20213 was 45.2%.
That being said, other departments have begun to account for a greater portion of Samsung’s profits in recent quarters. It’s the oft-overlooked semiconductor unit that’s been leading the charge. Data storage is a valuable and increasingly in-demand commodity, and there are only so many places that supply it. In fact, Samsung is one of the biggest memory chip makers worldwide.
On Store Shelves and in the Courts
Apple and Samsung have a turbulent relationship. Nor is that dislike without justification. In 2011, Apple sued Samsung, arguing that the Galaxy S and Galaxy Tab ripped off the iPhone and iPad respectively. Samsung countersued a week later, claiming that Apple stole its wireless networking technology.
The companies ended up suing each other half a dozen times that year, in courts on four continents. In 2014, Apple won a $929 million judgment in its initial North American suit, which Samsung then appealed. In 2018, Apple won the lawsuit, in which Samsung had to pay $539 million in damages.
Later, Apple won a second lawsuit. That summer the companies reached some sort of a détente, dropping all suits outside the United States but continuing their courtroom battles in the country where litigation is the national pastime.
A Symbiotic Relationship?
What makes this case, or series of cases, unusual is that plaintiff and defendant have a lucrative and symbiotic relationship. Through its many subsidiaries, Samsung sells parts for the very Apple mobile devices it’s allegedly copying without authorization.
Apple at one point was Samsung’s biggest customer for several reasons, some of them strategic. Size means getting the first crack at supply, which means that in times of high demand, Apple can increase its orders with Samsung and let smaller competitors worry about where to find parts.
Samsung fabricated most of the A4 and A5 processors found in Apple’s mobile devices. However, those processors’ heyday was several generations ago. Whether in business or in life, no matter how lucrative and mutually beneficial a hostile partnership is, at some point the principals start seeking gratification elsewhere.
That’s why after years of rumors, in the summer of 2014, Apple finally made it official that it was doing business with Taiwan Semiconductor Manufacturing Company (TSM). Currently, Apple designs its own processors, all of which are manufactured by the Taiwan Semiconductor Manufacturing Company (TSMC).
Despite moving away from manufacturing chips for Apple, Samsung still makes the screens for Apple's phones.
How Do Apple and Samsung Work Together?
Despite being longstanding rivals, Samsung supplies Apple OLED displays for its iPhones thanks to its ability to supply these at mass scale.
Who Is Apple's Biggest Competitor?
When it comes to smartphones, Samsung is arguably Apple's top competitor. In Q3 2023, Samsung sold 20% of smartphones globally compared to Apple, which made up 16% of world market share. Yet while Samsung has the greatest market share, Apple accounts for the largest share of global smartphone revenues, at 43%.
Why Are Apple and Samsung Rivals?
As two major producers of smartphones globally, Apple and Samsung have a rocky history of legal battles and disputes. Both companies have sued each other several times over the last decade for reasons including patent infringement across hardware and software features.
The Bottom Line
Apple is so big that it can live comfortably without Samsung. Similarly, Samsung doesn’t need to be an Apple vendor to flourish. As competitors in the marketplace, they’ve put life-changing electronics in the hands of hundreds of millions. As competitors in the halls of justice, they’ve spent enormous sums of money to assert their dominance. It’s a safe bet that both companies will continue to innovate for decades more.
