Apple drops $3.8B investment plan with Samsung
Apple Computer has voided a $3.8 billion joint investment plan with Samsung Electronics, according to a report published on Saturday.
The partnership had covered flash memory chips used in Apple's iPod digital music player devices, according to Seoul-based Korean Economic Daily.
"Apple had proposed about 4 trillion won joint investment with Samsung Electronics in the production lines of NAND flash chips used for its MP3 players," a senior Samsung official was quote as saying.
"But as the anti-Samsung sentiment has recently deepened among some political and civic groups, Apple ended the talks, complaining about the sentiment," the unnamed official was cited as saying.
Apple is now reportedly in talks with another memory chip maker for joint flash chip output in the United States.
Earlier this week, Samsung Electronics and its U.S. subsidiary pleaded guilty to price fixing charges and agreed to pay a $300 million fine for taking part in a conspiracy to fix the prices of semiconductors for computers and other electronics.
Both Apple and Samsung may be investigated by the Korean government for possible antitrust violations as a result of the conspiracy.
The partnership had covered flash memory chips used in Apple's iPod digital music player devices, according to Seoul-based Korean Economic Daily.
"Apple had proposed about 4 trillion won joint investment with Samsung Electronics in the production lines of NAND flash chips used for its MP3 players," a senior Samsung official was quote as saying.
"But as the anti-Samsung sentiment has recently deepened among some political and civic groups, Apple ended the talks, complaining about the sentiment," the unnamed official was cited as saying.
Apple is now reportedly in talks with another memory chip maker for joint flash chip output in the United States.
Earlier this week, Samsung Electronics and its U.S. subsidiary pleaded guilty to price fixing charges and agreed to pay a $300 million fine for taking part in a conspiracy to fix the prices of semiconductors for computers and other electronics.
Both Apple and Samsung may be investigated by the Korean government for possible antitrust violations as a result of the conspiracy.
Comments
Originally posted by verucabong
So does this mean that the iPod Nano supplies could be in trouble?
If Apple can't get as good of a deal, hen they will not get as much mark-up per player. No real effect on number of units sold. Just what they can 'take to the bank'
Originally posted by M.O.S.T
If Apple can't get as good of a deal, hen they will not get as much mark-up per player. No real effect on number of units sold. Just what they can 'take to the bank'
It depends on how much more they will have to pay for the flash memory. But I doubt they would raise the prices.
Originally posted by MacCrazy
Apple really should allow a level playing field - this is exactly the kind of thing we expect from Microsoft. Apple want open formats when they're behind but when they're in the leads they close all communications and do what's best for them - I'm not impressed!
What format are you talking about?
Originally posted by MacCrazy
Apple really should allow a level playing field - this is exactly the kind of thing we expect from Microsoft. Apple want open formats when they're behind but when they're in the leads they close all communications and do what's best for them - I'm not impressed!
you could easily remove the "Apple" from your post and replace with any other company. Every company wants the advantage.
Originally posted by hmurchison
you could easily remove the "Apple" from your post and replace with any other company. Every company wants the advantage.
it still pisses me off - where's the ethics?
Originally posted by 1984
They just don't like their business going to outsiders anymore. They have been strongly against the iPod because it is made by an American company. They feel the same way about Sony because they are a Japanese company. There has been a lot of anti-Japanese and anti-American sentiment building there. If this keeps up South Korea will be the new North Korea. It's a dangerous situation as it goes way beyond competitive spirit. I don't know where Apple will be getting future memory from. The article made it sound like they would be getting it from the United States but I don't know of any memory being manufactured there.
Apple must have secured a safe amount of memory until the holiday demand is over - at least they would be silly if they haven't!
Originally posted by MacCrazy
it still pisses me off - where's the ethics?
It's not a question of ethics. This is exactly how a free market should work. The company who purchases the most of any one product from a single vendor should receive a volume discount. Apple was offering to purchase 40% of Samsung's flash memory so they should receive a volume discount.
The only instance when a government should step in to adjust the pricing of a product is when two or more companies are conspiring to keep the price of a product artificially high. That is not the case in this instance.
Originally posted by fahlman
It's not a question of ethics. This is exactly how a free market should work. The company who purchases the most of any one product from a single vendor should receive a volume discount. Apple was offering to purchase 40% of Samsung's flash memory so they should receive a volume discount.
The only instance when a government should step in to adjust the pricing of a product is when two or more companies are conspiring to keep the price of a product artificially high. That is not the case in this instance.
I thought the article was implying the latter - I have no problem with economy of scale. It does worth noting, however, that free markets don't always work. Look at the sweat shop trade etc.
Originally posted by MacCrazy
it still pisses me off - where's the ethics?
There is no ethical problem. Large customers get price breaks in return for ensuring a steady production line output. In turn, Samsung goes to its suppliers and garrantees a large order from them and so on down the line. Apple gets an ensured supply at a good price and that's the end of the story, usually.
The problem is in Korea and other protected economies. The local customers put up a fuss. There are over 100 small makers of digital players in S Korea, most of them running on the edge of solvency. Some complained. The government is "looking into it". Nothing may come of it.
If there was one large customer in S Korea for these chips the gov. wouldn't care one bit what those small companies said. But Apple is foreign. That makes all the difference.
This shouldn't affect the chip deal. Apple withdrew from a seperate deal.
Originally posted by fahlman
The only instance when a government should step in to adjust the pricing of a product is when two or more companies are conspiring to keep the price of a product artificially high. That is not the case in this instance.
Price has nothing to do with it. The healthy operation of a free market economy relies on competition. So the government needs to step in when a single company develops such a large monopoly (economic advantage) in any one industry that it procludes any other company from being able to compete with it (eg. Bell telephone up until 1984).
Obviously, this is not the case with Apple and the iPod yet, but because Apple is able to use it's large market share to obtain memory (and possibly other components) at a lower cost than they're competitors, it certainly could feasibly happen in the next 10 years or so. Then again, I think there will always be a low-end market which Apple doesn't really have an interest in.
Originally posted by auxio
Price has nothing to do with it. The healthy operation of a free market economy relies on competition. So the government needs to step in when a single company develops such a large monopoly (economic advantage) in any one industry that it procludes any other company from being able to compete with it (eg. Bell telephone up until 1984).
Obviously, this is not the case with Apple and the iPod yet, but because Apple is able to use it's large market share to obtain memory (and possibly other components) at a lower cost than they're competitors, it certainly could feaibly happen in the next 10 years or so. Then again, I think there will always be a low-end market which Apple doesn't really have an interest in.
The government has always looked at monopolies in two ways.
The first is a home grown monopoly. That is a monopoly that is grown into by a company that invents something, or has some business method that has enabled them to become a monopoly. These are allowed, but have to abide by rules that smaller players don't. Apple vs MS is a good example. Apple can do things with their OS that MS can't (well, isn't supposed to).
The second kind is a monopoly that is achieved by buying competitors to form one company that is overly dominant. The government usually steps in to prevent that from occurring. As when MS tried to buy Intuit several years ago.
Originally posted by melgross
The first is a home grown monopoly. That is a monopoly that is grown into by a company that invents something, or has some business method that has enabled them to become a monopoly. These are allowed, but have to abide by rules that smaller players don't.
But the interesting thing with the Bell case is that they were, by your definition, in this category. Yet they were still broken up by the government:
http://www.att.com/history/history3.html
1. at least apple bailed, meaning, it's like, f*k this we're not going to be involved in this antitrust thing any further. rather than intel or m$ (just as an example) holding the line going, "what monopoly? what pricefixing? what anticompetitive behaviour?"
2. they would have secured 3-6months worth of supply which is under binding contract while probably the 6-12 month supply was the joint venture (?maybe)
3. there are several major flash memory vendors out there, again, for example's AMD's spin-off Spansion (which would not really be in the running) that just wet their pants thinking on how they could get a piece of the ipod pie now that samsung is out of the way
4. at least apple said, look, if you south korean companiess are being *dicks* by being anti-american anti whatever, get stuffed.
5. the SR Memory Co., Malaysistan, has just opened for business. i will be placing a call to ol' steve tomorrow. i will be changing my company logo to have a little we Heart america graphic on it.
Originally posted by auxio
But the interesting thing with the Bell case is that they were, by your definition, in this category. Yet they were still broken up by the government:
http://www.att.com/history/history3.html
But it was said at the time that they wouldn't have been if they didn't actually want to be. Which they did.
Of course the ATT case is interesting because it had been around for so long. It was also not a normal monopoly. Because of what it was, it was very heavily regulated. It was felt that for the good of the country as a whole, that the monopoly had to go.
ATT, after considering it for a while, decided that they would rather break up. It thought (see, no people, just it) that getting into the computer industry would lead to higher profits and growth for the ATT division that would be left.
Originally posted by sunilraman
here's my take on things:
1. at least apple bailed, meaning, it's like, f*k this we're not going to be involved in this antitrust thing any further. rather than intel or m$ (just as an example) holding the line going, "what monopoly? what pricefixing? what anticompetitive behaviour?"
2. they would have secured 3-6months worth of supply which is under binding contract while probably the 6-12 month supply was the joint venture (?maybe)
3. there are several major flash memory vendors out there, again, for example's AMD's spin-off Spansion (which would not really be in the running) that just wet their pants thinking on how they could get a piece of the ipod pie now that samsung is out of the way
4. at least apple said, look, if you south korean companiess are being *dicks* by being anti-american anti whatever, get stuffed.
5. the SR Memory Co., Malaysistan, has just opened for business. i will be placing a call to ol' steve tomorrow. i will be changing my company logo to have a little we Heart america graphic on it.
There's no evidence that Apple bailed from the chip purchase contract. I don't know why some people are confusing that with the joint venture to set up a chip production plant that was valued at (or Apple's half would have been) $3.8 billion. That is what they backed away from.
Is someone has info about Apple leaving the contract for chips, please show it. I haven't seen that anywhere.