Most of you may have read that Apple and Samsung are locked into a SmartPhone Patent Violation battle
Initial Jury Verdict in the Case
The jury ruled that (1) Apple's software patents on the iOS user interface were valid and infringed; (2) none of Samsung's patents (some are part of the 3G networking standard) was infringed; and (3) Samsung's tablet products did not copy the iPad's design. We expect Apple to seek sales injunctions against the accused devices and appeal the jury’s decision on the iPad and the Galaxy Tab.
Samsung will likely maintain its supply of semiconductor chips to Apple regardless this verdict, in our view. In fact, Apple's high reliance on Samsung components (chips, panels and various passive components) is a risk for Apple itself (eg, potential supply cut after if the court upholds the unfavorable ruling). Net-net, in our view, both companies will likely move towards new agreements that are win-win situations for both – for eg, Samsung makes fair royalty payments for old models and minimal running royalties for new products, which would ensure minimal impact on long-term earnings. Apple, meanwhile, ensures continuous supply of Samsung’s high-quality components at competitive prices.
Samsung’s latest flagship product, Galaxy S III, is not subject to the case and Samsung’s tablets have limited market presence. Longer term, we expect many changes to user interface design in Android OS (e.g. tap to zoom, multi-touch scrolling, etc.) and hardware designs. Google will become more active in protecting its Android alliance partners with newly acquired IPs from Motorola Mobility.