Samsung Electronics under FTC glare over cheaper chips

Seoul | Updated: Nov 24 2005, 05:55am hrs
South Korea is investigating Samsung Electronics Co over accusations of unfairly low pricing in its supply of flash memory chips to Apple Computer Inc, regulatory officials said on Wednesday.

Despite the probe, shares in Samsung, the worlds top memory chip maker, rebounded from a 5% fall a day earlier, as investors bet concerns over a chip venture unveiled by US rivals were overdone.

Analysts said the investigation was unlikely to have serious repercussions for Samsung. Samsung was also picked by Qualcomm Inc for a contract chip deal for mobile phones, the US wireless technology company said on Wednesday, in a move that could pressure Taiwanese contract chip makers.

Samsung and domestic rival Hynix Semiconductor Inc said on Tuesday they had agreed to $500 million and $200 million flash chip supply deals, respectively, for Apples iPod music players. The latest deals are part of a $1.25 billion pre-payment deal by Apple with Samsung, Toshiba, Hynix, Intel and Micron.

We are investigating whether Samsung has been unfairly supplying flash memory chips to Apple at cheaper prices than applied to domestic music player makers, a spokesman at the Fair Trade Commission (FTC) said by telephone.

An official at the regulators competition promotion team said the investigation had begun a while ago and added it also covered Samsungs earlier deals with Apple.

Small South Korean manufacturers of digital music players have complained Samsung is offering the chips used in Apples iPod MP3 players at an unfairly low price, putting them at a disadvantage. We are not investigating Hynix and have no plan for it as no allegation has been raised against Hynix, said the official.

A Samsung spokeswoman declined to comment on whether the chipmaker has been offering lower-than-usual prices to Apple.