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Trade body scrutinizes Samsung-Apple deal

The Fair Trade Commission (FTC) in South Korea said yesterday it is looking into whether Samsung Electronics Co may have engaged in unfair practices when it supplied NAND flash memory chips to Apple Computer Inc.

"We are currently reviewing the facts, but we haven't launched a full-scale investigation yet," said Lee Seuk-joon, an official at the FTC's unfair trade practice division, without elaborating.

Lee's comments came after local media reported last month that a possible joint investment project between Apple and Samsung had collapsed after Apple heard that the FTC may be investigating Samsung.

According to local media reports, a South Korean lawmaker also urged the FTC to conduct an investigation, saying that Samsung's supply of NAND chips at "below market prices" was hurting smaller Korean rivals.

Samsung, the world's largest producer of flash memory chips, has denied violating the law.

Samsung began supplying NAND flash memory chips -- widely used in music players and digital cameras -- to Cupertino, California-based Apple in the third quarter of this year for use in its hot-selling new iPod Nano music player, which stores data using a flash memory chip instead of a hard disk drive.

On Monday, Samsung extended its agreement with Apple by entering into a long-term contract to supply the chips through 2010. Apple has agreed to prepay Samsung US$500 million.

Lee of the FTC said that the commission isn't looking into Samsung's domestic rival Hynix Semiconductor Inc. Hynix also agreed with Apple on Monday to supply NAND chips through a long-term contract.

"No one has complained about Hynix so we aren't looking into this company," Lee said.

Separately, Samsung will provide made-to-order non-memory chips to US wireless technology and handset maker Qualcomm Inc as part of a partnership, the companies said yesterday.

Samsung wants to increase its market share in the non-memory chip business, while San Diego, California-based Qualcomm, which developed CDMA, short for code-division multiple access, a rival standard to the dominant cellular standard -- GSM, or global system for mobile, wants to diversify its source of supply.

CDMA and wide-band CDMA are the cellular technologies used in the US and South Korea.

Details of the agreement, such as how many chips Samsung will produce, were not disclosed.

As part of the agreement, Samsung plans to provide technology and manufacturing services in advanced CMOS-based processes to Qualcomm. CMOS, or complementary metal oxide semiconductor, is the most widely used integrated circuit found in almost every electronic product.

Qualcomm and Samsung will also collaborate on technology development, the companies said.
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