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Apple 'bullying' flash memory makers?

updated 07:55 am EST, Mon November 30, 2009

Apple NAND buying may hurt Samsung

Apple was accused on late Sunday by anonymous industry sources of 'bullying' NAND flash memory suppliers through its purchasing tactics. The company has allegedly, knowingly requested more memory from Korean firms Hynix and Samsung on a regular basis than it actually buys when the supply is ready. The iPhone and iPod maker is said by the Korea Times to regularly wait until the glut forces a price drop and then to buy only a smaller amount of stock that leaves excess inventory once again.

Since both Hynix and Samsung are heavily dependent on Apple for their memory businesses, they can't significantly challenge the practice and have had to watch as long-term contract prices for memory dropped 4 percent. The practice is considered "absurd" by one unnamed industry executive.

While doubts exist about how long the practice can last, it's believed Apple is racing to increase the capacity of its handheld devices as quickly as possible. Since launching the iPod nano in 2005, the American electronics giant has doubled the capacity of its flash-based devices on a yearly basis as soon as the technology has become available, culminating in this year's 32GB iPhone 3GS and 64GB iPod touch. Apple's product prices often remain consistent from year-to-year and consequently push flash producers to drop the prices of a given capacity where its rivals are often more conservative.

Neither Apple nor its suppliers have agreed to comment on the claims.



By Electronista Staff
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Comments

  1. bobolicious

    Dedicated MacNNer

    Joined: Aug 2002

    +8

    Apple bullying?

    http://news.bbc.co.uk/2/hi/business/4340388.stm

    (Samsung in price fixing admission)

  1. iphonerulez

    Dedicated MacNNer

    Joined: Nov 2008

    +5

    Bullying? Isn't negotiating prices considered

    good business strategy? Are they saying that Apple shouldn't try to lower their costs? Apple is their largest customer, so would they rather lose Apple's business. I'm curious as to who this unnamed industry executive is that considers the practice of negotiating prices absurd. I doubt it would be any Hynix or Samsung executives since they're getting steady business. Large customers usually get some sort of break from their suppliers. Apple is the one company where the money is basically guaranteed year after year. Where would these memory companies find a better customer? Would it be better for the memory suppliers to just have their inventory sitting on a shelf? Can Apple actually tell exactly how much memory is going to be required on a seasonal basis? Wouldn't that depend on customer demand?

    Maybe bullying is the wrong term to use. Don't bullies usually just take and give back nothing in return.

  1. sgirard

    Fresh-Faced Recruit

    Joined: Aug 2005

    +2

    Happens all the time

    Tactics like this go on all the time. Why is this news?

  1. peter02l

    Fresh-Faced Recruit

    Joined: Mar 2009

    +2

    comment title

    "The company has allegedly, knowingly requested more memory from Korean firms Hynix and Samsung on a regular basis than it actually buys when the supply is ready."

    "The iPhone and iPod maker is said by the Korea Times to regularly wait until suppliers wait until the glut forces a price drop and then buy a smaller amount."

    So what is the practice, does it buy more or less?

  1. DanielSw

    Fresh-Faced Recruit

    Joined: Aug 2009

    0

    Another media fabrication about a non-issue

    I don't blame Apple or its suppliers for not commenting about this stupid notion of "bullying."

    Everyone concerned, including we customers, should be happy that there is this level of activity of both Apple's demand for product which will result in more and better products from them, and that there is this much demand that the suppliers are shaken out of complacency to have to scramble to supply it.

    Come to think of it, this no-news item is actually serving as implied good news, which is how it should have been written.

  1. The Vicar

    Junior Member

    Joined: Jul 2009

    +3

    Hmmmm...

    If this is true, it's bad and should be stopped. But I very much doubt it's true -- these interactions are all governed by contracts, usually with penalties for failure to live up to the terms. If the flash manufacturers are getting repeatedly bitten by overestimates (and we have no proof that this is happening) and aren't negotiating upcoming contracts to add penalties for that behavior, then really and truly they have nobody to blame but themselves.

  1. Fast iBook

    Fresh-Faced Recruit

    Joined: Mar 2003

    -1

    100+ gig iPhone.

    When iPhone crosses the 100 gig storage marker, the iPod classic will likely be 200 gigs, and i will get both, because 100 gigs of storage on a phone would be insanely great.

    - A

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