The Korea Times: Apple ‘bullying’ NAND flash memory makers

Cyber Monday Sale over 400  deals“There are growing complaints in the semiconductor industry that Apple, the ‘smart’ phone maker extraordinaire and major chip buyer, is manipulating NAND flash memory prices through its ‘questionable’ purchasing strategies, industry sources said Sunday,” Kim Yoo-chul reports for The Korea Times.

“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.

35 Comments

  1. The issue here is Apple Per Purchases huge amounts of NAND at a set price then schedules deliveries based on need. Want is at issue is Apple schedules deliveries are contract commitments with penalties to the supplier who misses a delivery date. So, the NAND Makers have to make more NAND Flash then they want too. The Excess NAND reduces the prices over all. If Samsung as an Apple NAND delivery on Dec. 1, 2009 and Microsoft or any other company ordered NAND for a Dec. 1 2009 delivery Samsung would by contract have to deliver to Apple first. Because Samsung manufactures NAND for Apple and they also manufacture NAND to sell to others. So, Samsung makes about 40% more NAND then they normally sell.

  2. Well grill my dog! Talk about biting the hand that feeds you!

    Apple keeps them afloat through a global recession and yet they find a reason to complain?

    If Apple is over-ordering so they don’t get stuck not being able to fill customer orders. This is especially relevant with small ticket, near-impulse buys items like iPods.

    What if suddenly, iPhones and iPods were on backordered because of a NAND shortage? Not a good thing for Apple.

  3. This sounds ridiculous to me. I thought I heard complaints not too long ago that Apple way buying so much flash memory that other companies couldn’t get enough to complete. Now we’re hearing that Apple is requesting they make so much that they drive the price for this down, and then not buying what they request. How come the maker’s aren’t responding to Apple’s request by only making as much as their projections (ostensibly based on recent history and anticipated future demand) predict? How come Apple’s competitor’s aren’t snatching up the excess to better compete against Apple? Or maybe RIM already is, and that’s how they can keep up the BOGO (buy one, get one free)? Either way, it sounds to me as though demand *is* keeping up with supply. I don’t see the true nature of the issue.

  4. you know what?

    I can honestly say, there is almost nothing apple can do to bother me.

    why?.. check the history books. This company is full of ‘crazy ones’..

    as for the koreans, i think they have a case, but at this point, that’s about all they got, Apple is big big big, and fucking smart. if Korean companies thing they can try and ask the courts for a ‘handicap’ they’re really desperate.

  5. For those of you who didn’t bother to read the article before commenting, Demon has taken the most salient part of the article and added a hundred extra words for your, er, reading enjoyment.

    Microsoft has been doing this for years, promise way more than they actually deliver!

    Korea, the land where you can buy a pair of Nike shoes for seven bucks and a genuine Rolex for twenty-five from the same street vendor in Osan.

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