Apple: Chip Bully?
Posted 11/30/2009 at 9:15am
| by J.R. Bookwalter

Apple’s portable devices are clearly an international hit, but a new report suggests that the popularity of the iPhone and iPod comes at a cost for other consumer electronics manufacturers.
The Korea Times reports that the semiconductor industry is starting to lobby growing complaints against Apple for manipulating NAND flash memory prices through what they call “questionable” purchasing strategies, according to industry sources.
Be that as it may, Samsung Electronics, the world’s biggest flash memory maker, and Hynix Semiconductor, ranked as No. 3, are left to just accept their fate due to Apple’s increasing global influence. NAND flash memory chips are used in memory cards and as storage drives for mobile devices, computers and other electronics product.
The complaints mostly focus on Apple ordering more chips from semiconductor makers than the amount they actually buy from them, creating a shortage for other device makers. “Apple should certainly be blamed for deteriorating the supply and demand cycle in the global NAND flash market,” complains an unnamed senior industry official. “The company doesn’t make immediate purchases, but waits until chip prices fall to the level the company has internally targeted.”
For their part, Apple’s strategy is paying off in rising revenues and profits each quarter, which another industry official described as “absurd” when asked about Apple’s purchasing strategies. “Samsung and Hynix both provide chips to Apple and have less of an edge in deciding prices and volume,” the unnamed official said. “Apple’s strategy could hurt the industry’s health.”
The strategy is also seen as a method to hold the competition at bay, including Google-backed Android handsets that have been gaining a lot of buzz in recent months. Market researcher Gartner predicts that Android-powered handsets will slightly edge iPhone sales in the next two years.
“If it is true that Apple gets NAND flash memories at lower prices from top chip vendors, it is questionable how long they can maintain this strategy,” concluded one official.