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Samsung, Apple Investment Talks Collapse
[October 17, 2005]

Samsung, Apple Investment Talks Collapse

(AP) Samsung, Apple Investment Talks Collapse
AP Business Writer
SEOUL, South Korea
Samsung Electronics Co.'s talks with Apple Computer Inc. on a possible joint investment to produce NAND flash memory chips have broken down, Samsung said Monday.

"Talks didn't proceed beyond the preliminary stages," said Sungin Cho, a Samsung spokeswoman. "We're not commenting on the reason that talks didn't develop."

Cho spoke after the Korea Times newspaper reported Monday that a potential 4 trillion won ($3.8 billion) joint investment deal collapsed because Apple decided to pull out after hearing that South Korea's Fair Trade Commission could investigate Samsung over its supply NAND flash memory chips to Apple.

Samsung is supplying the chips, used in MP3 players and digital cameras, to the Cupertino, California-based company for use in its new, pencil-thin iPod Nano music player.

Earlier this month, local media quoted Fair Trade Commission Chairman Kang Chul-kyu as saying on a radio program that the antitrust regulator could investigate Samsung if necessary on whether the company sold chips to Apple at below-market prices.

South Korean media have reported that Samsung is supplying the chips to Apple at half their market value, a claim Samsung executives deny.

Last week, federal officials in Washington said Samsung will pay a $300 million fine to settle accusations it secretly conspired with industry rivals to fix prices and cheat customers by forcing them to pay high prices.

Samsung's guilty plea to a felony price-fixing charge capped a three-year investigation by the U.S. Justice Department into makers of the chips. The fine is the second-largest criminal antitrust fine in the United States.

The Korea Times reported that South Korean MP3 manufacturers claim their sales are being hurt by the low price of the iPod Nano.

While Samsung officials have openly talked about supplying flash memory chips to Apple, they have so far declined to provide details.

The FTC said Monday that if it receives a complaint it will look into the allegations and determine whether to conduct an investigation.

Last week, I.J. Kim, vice president of memory sales and marketing at Hynix Semiconductor Inc., the world's second-largest memory-chip maker by revenue after Samsung, said that Hynix is in talks with Apple to supply NAND flash memory chips. He declined to comment on specifics.

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