“And there is not much that Samsung Electronics, the world’s biggest flash memory maker, and Hynix Semiconductor, the industry’s No. 3 player, can do about Apple’s moves, as the American company increasingly gains leveraging power due to the global popularity of its iPhone handsets and other consumer electronics products,” Yoo-chul reports.
“The summary of the arguments goes as this ― Apple is contributing to the suppression in flash memory prices by ordering more chips from semiconductor makers than the amount it actually buys from them,” Yoo-chul reports. “‘Apple should certainly be blamed for deteriorating the supply and demand cycle in the global NAND flash market,’ a senior industry official told The Korea Times, refusing to be named.”
“‘Apple has asked Korean semiconductor makers to produce a certain amount of chips for its digital products, only to actually purchase a smaller volume eventually. The company doesn’t make immediate purchases, but waits until chip prices to fall to the level the company has internally targeted,'” Yoo-chul reports. “The chip industry had hoped Apple would increase purchases of NAND flash memory chips to boost the output of iPhone and other flagship devices.”
Full article here.
MacDailyNews Take: First of all, without Apple, there is no NAND flash market. Apple created the demand nearly singlehandedly and therefore controls not only a great deal of the supply, but influences prices as well. Welcome to unfettered, unrigged capitalism, Korea. Second of all, this article is nothing more than yet another Korean anti-Apple hit piece. This sort of nonsense has been going on in Korean media as certain Korean smartphone makers get ready to be converted from protected over-charging purveyors of mediocrity and worse into Apple’s roadkill. This is iPod redux (please see related articles below). The entities in question never come out and say who they are, most likely because they also have massive deals in place to supply Apple with components, including the aforementioned flash memory (and LCD panels, among many other things). Our advice to those interests peppering Korea with this poppycock: Shut up, quit whining, take your medicine, and keep looking for another market around which you can institute Korean super-protectionism, so you can ripoff your own countrymen yet again.
Purchase agreements are double edged swords. Apple doesn’t take possession of the chips it orders: there’s a penalty for that. The manufacturer doesn’t build as many chips as Apple orders” there’s a chip for that.
Best pricing in a supply chain (especially a just in time supply chain) demands that everyone know what the other’s requirements will be, then everyone performs.
IF Apple did as the article claims, manufacturers would get penalty payments, and if the conduct persisted they wouldn’t commit to the quantities Apple wants.
Chip makers are clamoring for Apple business because nobody purchases the quantities Apple does, and nobody pays as well as Apple does.
This article is FUD at the LG and Samsung level. They just took a 65% hit on the retail price of their smart phones because of the iPhone, and they’re not happy about it.
Gee, they’re crying on the pile of money they make from Apple.
That just breaks my fscking heart! 🙁
Apple is cheap and someday this will have effects on the company. Intel had to stop selling them NAND Flash a few years ago because their price target is so low that Intel pretty much just laughed back at them. They rather get business overseas than help other US NAND Flash companies. Fuc* Apple.
so if i’m reading this right, these supplies are told an expected amount and figure their profit on getting all of them bought and paid for right now. but then Apple buys as they need and the prices go down in the mean time.
so the solution, if Apple wants a guarantee of quantity they have to buy now, at today’s prices. otherwise they buy what they need right now and come asking for more later.
but that would lead to Apple finding a supplier that will play by Apple’s rules so of course no one will show those kind of balls. but instead bend over and whine about it
You guys are idiots.
Stay with the story.
Apple breaks the contract and then takes advantage of lower NAND prices, which futher drenches their Greedy Corporation in KOrean Money.
If that isn’t fraud, what is?
But Samsung and Hynix know this and play along this game. So who is at fault? It would be the Flash memory producer to play along this game.
@ron
Err… Milquetoast… yeah. Stupid homonyms!
“Mark these words, there’s going to come a time in the future where you’ll question your life’s mission of deriding Microsoft. It’s when Apple becomes just as evil as the original evil empire. You see the signs on the wall. When you stop to think, there’s nothing that makes Apple any less better, except for … less marketshare, and a nicer user interface. Apple, even at this early stage of 9% marketshare, is showing signs. Draconian NDA’s for iPhone developers. Removing the matte screen option when most polls show that between 40 and 60% of people prefer matte. Literally, Apple could not care a stuff about it’s customers. It is all about their money. So, if that’s how they are when they are 9% marketshare, imagine them when it gets to 40% marketshare. Truly — and you mark these words — you are going to wonder if you’ve spent your efforts wisely. You’ll get disillusioned with yourself, and how, in your younger days, you realise you, in some small way, contributed to the growth of the new monster. It’s like the Godzilla movies. When the old monster dies, a new even more vile monster rises to take it’s place. And the world is no longer safe.”
Like I said before, Koreans are anti-American.
@JJJ:
Paranoid just a little…?? Boogiemen hiding under your bed, and behind every bush?
What a load of crap. if Apple is breaking a contract then Samsung doesn’t have to play nice with them. Seems to me that Samsung is making oodles of money off of Apple year after year. If Apple is dicking them around, sell the damn flash elsewhere….hey…maybe Microsoft could use it for the Zune… version 7 (hehehe just made that version up).
A contract is a two way street. You don’t play nice with me, then I do not have to play nice with you.