Your grandmother's glass-lidded casserole dish isn't the most likely place to look for cutting-edge technology. However, this week’s announcement that Samsung's display unit is acquiring the largest share of famous crockery outfit Corning is quietly the news of the week.
Samsung will own nearly 8 percent of the New York-based glassmaker, and will strike a decade-long supply deal. Even in a week when Apple announced more of its sleek new products, Samsung's grab for a key supplier of the base technology in your mobile or tablet screen is an enormously important move.
Why? Well, as long as four years ago, the big issue in the then-new tablet market was whether Apple, not Samsung, was going to corner the market for touchscreen glass supply. The new deal suggests Samsung is closer to dictating the terms of this important tablet component. That affects Apple in part because Samsung actually supplies a lot of Apple's glass. The two behemoths are rivals in the showroom, but cooperate on component supply.
Enter Corning. Its scratch-proof Gorilla Glass is the industry standard for smartphone and tablet screens, including tech used in the iPhone. Samsung also supplies finished screens for giants like Lenovo and Sony, whose ultrabook lines are rivals for Apple's MacBook laptops, and their much-ballyhooed “Retina” screen technology.
So Apple, which has bet its immediate future on touch screen products like the iPhone and the new Retina iPad models, could be more beholden to Samsung today than it was a day before the Corning deal. The 10-year agreement, and the possibility of a glass supply Samsung owns down to the base technology — Corning's technology — gives Samsung significant supply chain leverage over a component that's the lifeline of Apple's key products. That's a tenuous position for the Cupertino outfit to face.
Pricing also comes into focus under the deal. Corning's calculation of price and demand for its glass tech will almost certainly become a calculation made by primary shareholder Samsung. Earlier this month, rumors were already flying that Apple's new iPad mini, which features the Retina technology, could be delayed or slowed by supply issues. If that proves true for future devices — and Apple only announced the new products Tuesday, so we'll see how fast these ship — Samsung could theoretically sit in the middle, brokering Apple's access to Corning's technology. Not a bad deal for Samsung.
Corning, better known for casseroles than computing, has seen its stock price sour nearly 30 percent on the news, according to Reuters. For its part, Samsung looks to be gaining access to Corning's research and development of new glass tech, including future steps into flexible glass, the Reuters report said. Samsung has also made investments in German and Japanese firms likely to supply glass tech in the near future, adding more evidence to suggest that the Korean company is looking to have a big role in the glass supply chain for awhile, and that Apple is going to have to play ball with them, or compete.
If the US firm decides to compete, it's doing so from a step behind now — a fact no one happened to mention at Apple's dramatic stage presentation this week.