Apple moves to take over flash memory industry from Samsung

“For only the second time in recent memory, Apple has used its pile of cash to buy a hardware company and threaten survival of another tech industry,” Ed Sutherland reports for Cult of Mac.

“Reports say Apple is ready to spend up to $500 million to acquire Anobit, an Israel-based flash memory maker already used in the iPhone, iPad and MacBook Air,” Sutherland reports. “It probably didn’t hurt that the purchase could free Apple’s reliance on its courtroom buddy Samsung.”

Sutherland reports, “The flash memory deal would be the first under CEO Tim Cook’s leadership and only the second time the company acquired a hardware firm. In 2008, Apple paid $278 million for P.A. Semi which later produced custom ARM-based chips for the iPhone and iPad. Today’s deal could also help Apple walk away from a 2005 agreement with Samsung to ensure flash memory for the iPhone, iPad and MacBook Air.”

Read more in the full article here.

MacDailyNews Take: Perhaps slavish copying does go punished after all?

Apple’s Anobit buy, if true, seems to be more about preserving and furthering competitive advantages than about hurting another company in particular, but if it happens to hurt Samsung, anyone who values innovation and despises knockoff peddlers won’t shed a tear.

[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]

Related articles:
Analysts see competitive advantages for Apple in Anobit buy – December 13, 2011
Apple reportedly buying Israeli flash memory company Anobit for upwards of $500 million – December 13, 2011

30 Comments

  1. Absolutely perfect. You da man Tim.

    Let this be a warning to other companies that try to pull this bullshit on Apple….we can work well together but if you stab me in the back, you will get hurt.

    1. To be correct, though, this particular purchase is not related to moving off Samsung or taking flash memory industry from them.

      This Israeli company has nothing to do with producing flash memory — it is about designing flash memory controllers, which can control either Samsung, or Toshiba or Hynix flash memory — all of which Apple uses for many years.

      1. I’m sure you are correct about this purchase… it’s a technology purchase, not a “component supply” purchase.

        Also, part of Apple’s strategy is to buy (or commit to buying) key components in very large volume, exercise significant control over the available supply of key components (such as flash memory), and thereby raise the cost of production for “everyone else” (who cannot buy in Apple’s large volume). That’s one reason Apple has an acceptable profit margin selling iPads for $499, while it is a challenge for the competition.

        Apple is not going to stop buying parts from Samsung anytime soon. But the threat of Apple reducing its dependence on Samsung over time should make Samsung think twice when it copies Apple so “slavishly.”

  2. You just don’t piss off a customer…. And you for sure don’ piss off a customer with the means to bury you… Samsung brought this on themselves… Apple was just fine going after Google under SJ’s reign … Samsung decides to make an enemy of the guy he mentored, Cook… Did they REALLY think he would not make a play from the Steve Jobs play book and declare war on those that offend his sense of fair play… Borrowing the words of a skit by Carlos Mencia…..” they no have the history channel in Korea”

  3. don’t know much about flash memory or anobit but as others have pointed out Anobit seems more of a design rather than production company. Still it seems Anobit’s tech might allow apple to purchase generic NAND and add Anobit’s controllers:

    sanford Bernstein: ” (Apple’s anobit deal)… With this move, we believe Apple is intentionally attempting to commoditize NAND suppliers by providing their own advanced NAND controllers, therefore buying just raw NAND from suppliers.”

  4. I doubt Apple would spend $500 million just to piss off Samsung. It’s more likely a play to ensure that Apple has at least a certain amount of memory chips for its devices given the worldwide shortage of flash memory. Apple will still need to buy from Samsung, but Apple’s cost from Anobit will be significantly less than from Sansung since Apple doesn’t need Anobit to make a profit.

  5. The whole industry relies on copying Apple products for their R&D and thinks they can get away with it. Samsung is starting to learn otherwise.

    Next up: Eric Schmidt will soon be losing out to iSearch and iMaps.

  6. This is the same move that they did with PA Semi. The fact is that mechanical drives are on their way out. The ONLY thing limiting adoption is the price per GB. But as it stands now Apple can’t do anything about it, aside from buying in BULK. If this acquisition is legit then Apple just did something about it.

    This is what Tim Cook brings to the table. He is a supply chain guy and this will free up Apple, help them lower prices on SSDs and their own internal costs for iPhone/iPad/iPod.

    This has very little to do with Samsung, but it will bite them in the a** down the road. Which I’m sure makes Apple smile just a bit.

  7. It seems things between Samsung and Apple are more difficult than let on. Samsung components account for 26% of the cost of an iPhone, Apple seems to be hedging it’s bets.
    At the moment Samsung makes money on every iPhone and every Galaxy phone. Apple is for all intents and purposes subsiding Samsungs research and development costs on all of it’s devices.
    No one can blame Apple for feeling a little used and cheated on.

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