Apple Accused of Flash Memory Manipulation

Published on 11-30-2009 05:08 AM

With Apple's enormous power and size, it isn't difficult to imagine the many ways in which the company is capable of exerting massive influence wherever it places its high beams. Naturally, such influence leaves Apple vulnerable to the occasional criticism of market manipulation.

Case in point. This week Apple is facing claims that it is "manipulating flash memory prices" through the duplicitous act of placing huge orders and then ultimately taking less than originally demanded. According to a report from 9to5Mac, Apple continues to affect prices with the tactics they are believed to habitually employ.

An article in the Korea Times cites industry sources, principally chipmakers, who seem to be frustrated because Apple will place a large order for the component but then subsequently buy less than originally demanded, generating market saturation and suppressing prices.

The actions are hitting giant memory makers Samsung and Hynix, both of which are virtually powerless to stop Apple given how desperately they need to continue doing business with Cupertino. But when the "lean margins" experienced by Samsung and Hynix are observed in comparison to Apple's soaring earnings, the real impact of the alleged shoddy purchasing practices can be seen.

"Apple should certainly be blamed for deteriorating the supply and demand cycle in the global NAND flash market," The Korea Times quotes an un-named industry official as saying.

When a claim like this is levied, it's important to consider the source. And in this case, we don't even have a "source," unless you count the unnamed individuals cited in the story who have plenty to say but few details or other shreds of evidence to provide.

Another industry official, also reluctant to be identified, used the words "absurd" to describe Apple's purchasing strategies.

It should also be noted that Samsung, Hynix and Apple Korea did not contribute to the Korea Times report that sparked the controversial accusations.

Image via Apple

_{This article was originally published in forum thread:
Apple Accused of Flash Memory Manipulation
started by
Michael Essany} _{View original post}

24 Comments

steve-z17 - 11-30-2009, 09:46 PM

Originally Posted by minhwan

learn to read, the article state that source is not from Samsung or Hynix. So it could be from somewhere else. It might be whining if it's from Samsung & Hynix but from others point of view, how come it'd be whining ? can you not point out others absurdity ? can you not correct others fault ? would you stay in your room quietly when some one taking all your stuff in living room ?

You don't see things until you do something. You will never accomplish things if you stand still.

you have bad attitude by the way

How bout you stop being a jerk, I didn't ask you to answer my questions in a rude way, I just wanted to know. I automatically have a bad attitude because I ask questions? I'm asking them to understand, to gain knowledge about the subject, and I don't need you acting like a big shot who can try and put ppl down because they might not know as much as you on the matter.

Thank you hancoma. I appreciate your info, that's very helpful!
- Reply

jOnGarrett - 12-01-2009, 05:22 AM

Originally Posted by SubCool

Kudos to Apple. They are helping bring the prices down on already expensive product.

well by that logic AT&T should over-order iPhones to bring down the price on an already expensive product.
- Reply

rhekt - 12-01-2009, 12:56 PM

Originally Posted by hancoma

Also, the vendors cannot simply 'change' the price. There are corporate contracts for pricing models on quantities.
If the vendor requests a larger quantity, the price goes down, and if the vendor bails out due to changing demand...there are no repercussions.
They are left with a huge inventory of parts, and now have to sell them, as inventory turns is a metric of profitability. Thus the price goes down.

No, they cannot simply change the contract, this is done maybe every 6 months as part of pricing model and assy, typically parts cost and replenishment is a set industry standard across all OEM's and not negotiated.
If these prices are changed, a new vendor is sought....and other vendors will give them the prices they want simply for the business.

very good to know not all buisness practice is the same. thank you.
- Reply

thevmax - 12-06-2009, 09:41 AM

Originally Posted by jOnGarrett

NO refunds, 80% restocking fee. problem solved.

I agree with jOnGarrett.......
- Reply

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