Filed under: Apple Corporate, Hardware, Apple Financial, iPhone
Chip makers: Apple manipulating flash memory prices
The Korean Times is reporting today that Apple is (allegedly) manipulating the flash memory market. An unnamed source tells the Times that Apple is ordering more chips than it actually purchases: " ... [Apple] doesn't make immediate purchases, but waits until chip prices to fall to the level the company has internally targeted."The iPhone uses NAND flash memory, which both Samsung Electronics, the world's No. 1 flash memory maker, and Hynix Semiconductor, the industry's 3rd biggest, manufacture. Both companies sell their NAND chips to Apple.
The iPhone's performance in Asia has been modest compared to the US and elsewhere. Hindrances like a lack of Wi-Fi and a strong black market have affected sales in China. Eager crowds welcomed this week's release in Korea, but in Japan sales have been quite slow.
I'm no market expert, but I imagine Apple must predict how many units it needs and doesn't always hit the mark with 100% accuracy. We'll follow this story as it develops.
[Via AppleInsider]
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Reader Comments (Page 1 of 1)
Just Cause said 4:36PM on 11-30-2009
Hmmm, I hear Samsung doesn't like Apple making so much money :-)
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todd said 8:11AM on 12-01-2009
Ex-Flash/DRAM VP here..... this is perfect. These companies complaining ALL have people in jail for price fixing! How is it possible for a CUSTOMER to fix prices...it's the ultimate in capitalism.
The real shame is that Samsung and Hynix killed off competition through illegal acts (like MS or Google and freeware).
Jordan said 4:44PM on 11-30-2009
I can see Apple doing this, just another way to increase their profit margins. Greedy bastards
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jimtastor said 5:20PM on 11-30-2009
Ahh, but greed is GOOD!
cowfodder said 9:47PM on 11-30-2009
@Jordan
Weren't you told to stop trolling here like a week ago?
Jordan said 9:54PM on 11-30-2009
I was told...but eh. Besides, trolling would be a lot more of an intense comment than the one I made, it would be more like MAC sUCSKasdf oihjksldfj FUUCKSDFKSjs!!!!
My comment just simply made a point.
David said 2:28AM on 12-01-2009
I wouldn't say greedy bastards, more maximising profits.
Lets face it, if you guys were going to buy a TV from a retailer last week you would have waited till Black friday would you not?
Dale said 6:20PM on 11-30-2009
The virgins who provide the blood that Steve Jobs bathes in every day don't come cheap.
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Curly Eric said 6:39PM on 11-30-2009
So Apple optioned a supply slightly higher than they believe they will need. Usually this involves many contracts and these companies are paid as part of the option.
This is sound business practice and perfectly reasonable to me.
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Dan Woods said 6:44PM on 11-30-2009
They probably order however much memory they think they need, then reject all the chips which are defective.
If Chip Manufacturers cannot maintain high unit standards, and Apple only want high quality units, there will be a lot of low-quality surplus chips. Search any Chinese Electronic Surplus reseller and you'll see dozens of iPods, USB Flash Sticks and cheap media players being sold cheap because they have been rejected by Apple and Kingston for containing defective chips.
This could be the Chip Manufacturers complaining because Apple won't pay for defective chips.
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bigandy said 7:04PM on 11-30-2009
"manipulating" is a weird word here. I'm sure that Apple has an effect on chip prices, but that's normal for most goods in most markets when when dealing with a major buyer.
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David Hildreth said 7:26PM on 11-30-2009
So, Apple is stocking up when memory is cheap.
How is that manipulating the market? It's good business sense.
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Cy Starkman said 7:33PM on 11-30-2009
Yes it is.
Perhaps they are saying that because Apple does that and then buys huge, it locks up heaps of resource and makes that resource therefore more expensive. Means other companies have a barrier to entry
mike said 10:47PM on 11-30-2009
Starky,
Ever heard of Wal mart? Just because you have purchasing power doesn't mean you've done anything wrong. Apple owes its iPod lead to the exclusivity on those Hitachi (I believe) chips way back in 2000-2001. They're gonna try and do it over and over. There's nothing illegal about what they're up to. And buying in volume means they can get a sweet deal. And price their stuff more affordably.
The real question is why did the multi-billion dollar Korean giants not pick up those chips? Oh yeah, lack of demand. Doh!
Cy Starkman said 2:01AM on 12-01-2009
Did I say Apple was doing anything wrong?
I agreed with the poster and added further ponderi
gs as to what the Koreans were talking about.
So Mikey boy how's about reading first before yer hands fly off writing poorly considered replies.
mike said 3:40AM on 12-01-2009
I repeat: "The real question is why did the multi-billion dollar Korean giants not pick up those chips? Oh yeah, lack of demand. Doh!"
In other words, the Koreans should have bought up the chips but they can't justify it because they have nowhere near Apple's demand.
Your post suggests, like the Koreans complaining, that Apple is actually manipulating the market. My response to you was that the Koreans should have done it first. You know. Korean phone companies and PMP companies?
oedipus said 9:04AM on 12-01-2009
IMHO, Apple probably is price fixing for their advantage. They hold huge contracts over the chip manufacturers and demand huge supplies of readily available chips. This is flooding the market for the product, since they are only buying part of the order. The chip makers themselves can't make less due to the contract that they are in with Apple, without fear of loosing the contract. When the prices drop Apple buys up all the chips. The legality of it all is probably fine, like the others stated WalMart does exactly the same from their third party contracts. In all honesty, the chip manufacturers should state their case in the WTO as this is what the whole organization is about in the first place.