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Follow UsKim So-young and Oh Jung-hwa
SEOUL: South Korea is investigating Samsung Electronics Co. Ltd. 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 world's top memory chip maker, rebounded from a 5 percent fall a day earlier, as investors bet concerns over a chip venture unveiled by U.S. 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 U.S. 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 have agreed to $500 million and $200 million flash chip supply deals, respectively, for Apple's 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 said by telephone.
An official at the regulator's competition promotion team said the investigation has begun a while ago and added it also covered Samsung's earlier deals with Apple.
Small South Korean manufacturers of digital music players have complained Samsung is offering the chips used in Apple's 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.
"The deal hasn't breached any laws so we believe there will be no problem," said Lee Soo-jung, the spokeswoman.
Apple officials could not immediately be reached for comment.
Analysts doubted whether the probe would lead to any serious regulatory move.
"I don't think the FTC could impose any restrictions on Samsung as it's a common business practice for companies to offer lower prices to big-volume customers such as Apple," said Jay Kim, an analyst at Hyundai Securities.
Shares in Samsung, which has a market value of $86 billion, rose 3.6 percent to 611,000 won by 0600 GMT, after falling 5 percent in the prior session.
Asian chip makers dived on Tuesday after Intel and Micron agreed a widely anticipated venture to make flash memory chips, used in hot-selling consumer electronics goods including MP3 players and digital cameras.
QUALCOMM DEAL
Analysts said the deal with Qualcomm, one of the world's leading vendors of mobile phone chips, would help Samsung bolster its relatively weak non-memory operations.
Qualcomm has been looking to expand its suppliers of chips after having supply woes in recent years because its contract partners could not produce enough chips.
Samsung's entry into the foundry business puts it in competition with firms such as Taiwan Semiconductor Manufacturing Co., the world's biggest contract manufacturer of microchips.
"Samsung's deal with Qualcomm will pave the way for the chipmaker to expand the chip foundry business, and is bad news for Taiwan foundry manufacturers," Kim said.
Qualcomm did not give a value or time frame for the contract.