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. MDN is usually passionate about stuff like this. I wonder why they gave such a “milk toast” response. ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

  2. @G4Dualie,

    I *DID* read the article, and Demon’s response. It is still a lot of verbal smoke and no substance. Nothing says the chipmakers HAVE to accept Apple’s terms and make more flash than Apple actually buys. It’s called negotiation. If there are so few chipmakers, it seems to me they have the upper hand. If they tell Apple “No, we’re only going to make the amount you actually contract to buy”, where else is Apple going to go to get their flash memory?

    Sorry folks. Based on the information available here, I call BS on this whole issue.

  3. Totally in agreement with Kevin.

    First there was a chip shortage and no NAND for Apple’s competitors. Apparently Apple was consuming all that it had ordered and more.

    Now Apple doesn’t take all that it orders and there is a surplus of NAND. But where now are all those “competitors” that were whining about how there is no NAND supply because of Apple? You would think that they would be snapping up the excess in light of the lower prices!

    Whatever, lower NAND prices are better for consumers anyway. I’m not complaining! Thanks Apple!

    –mAc

  4. This isn’t abuse. MDN is right–it’s capitalism.

    It’s only against the rules if Apple tries to forbid them from making product for their competitors, but that isn’t the case here.

    In many ways it’s similar to what is done to control prices in the diamond market.

  5. Wow, all these posts and no mention of the real issue that makes the article particularly offensive–the fact that apple was long the victim of ram antitrust abuses by these manufacturers that had apple (and thererefor us) overpaying for ram for years.

    After getting screwed on ram pricing for a decade or more doesn’t it make perfect sense for apple to protect itself when marketing severly ram dependent products?

  6. I don’t see the NAND producers complaining about Apple’s up front payment or refusing to take Apple’s business.

    Yes, Apple may be playing some games with ordering and fulfillment, but it also could be said that Apple is securing its pricing and allotment based on projections with some additional leeway in the event sales exceed expectations and production needs to be increased. Apple wouldn’t/couldn’t increase production if additional NAND would cost three times as much as previously priced.

    And have no doubt, the NAND producers would be very happy to significantly increase the price if Apple came to them with last-minute needs for more memory.

    The real problem is that the rest of the NAND market hasn’t developed, primarily because no other company seems capable of producing a true iPod or iPhone competitor. Put another player in the field, and NAND memory sales will increase.

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