Apple Abandons Samsung Chip Deal

by , 8:20 AM EDT, October 17th, 2005

Apple and Samsung are no longer pursuing a potential deal where Samsung would produce memory chips for the iPod, according to a Reuters report in the Washington Post on Monday. Negotiations for the joint investment plan, worth US$3.8 billion, fizzled out in part due to growing resentment towards Samsung by South Korean politicians and civic groups, but an investigation into the possibility of Samsung selling chips to Apple at below market prices may have played a role as well.

A representative from Samsung stated that the joint investment talks ended at an early stage, siting a difference over terms. Although Samsung is the world's largest producer of NAND flash memory chips used in iPods and other MP3 players, the negotiations breakdown with Apple must hurt.

This isn't the first egg in the face incident for Samsung. Earlier this month, Samsung plead guilty to price fixing charges.

Apple had previously planned on purchasing 40 percent of Samsung's NAND memory chips for the second half of 2005 for use in the iPod nano and iPod shuffle. It is negotiating an investment deal with a U.S. chip manufacturer now, and hopefully will have a deal in place shortly since components for building the iPod nano are already in short supply.