Why Apple's forcing Samsung to chase SanDisk

Why Apple's forcing Samsung to chase SanDisk Related Blogs Antiviral Art The Best Restaurant in New York Blackbag Defamer Disputations Documents Dodgeandburn Dog Domesticity Drugs Fine Vining Fortress America FrenchGawker Weird Internet Interviews Justice Morning After PhaseZero Politburo Rankings Gawker Review of Books Sausage Slowgawker Sony Hack One Man's Take The Cuck Themachines The Vane The West tktk True Stories Valleywag Why Apple's forcing Samsung to chase SanDisk 6.20K Owen Thomas 09/17/08 03:20PM Filed to: Acqusiitions Acqusiitions Antitrust Apple Samsung Sandisk Toshiba iPhone iPod Top Valleywag Samsung has launched a hostile $5.9 billion offer for SanDisk, a rival maker of flash-memory chips, which SanDisk has rejected. Toshiba, which manufactures chips in partnership with SanDisk, is considering a blocking bid. The posturing is typical: SanDisk says the bid undervalues the company, while Samsung executives retort that it is "full and fair." Leave aside the deal theatrics: Why does Samsung want SanDisk?Simple: It needs to bulk up to contend with the might of Apple, one of the largest buyers of flash memory. Samsung has supplied the memory chips for Apple's iPhone since its launch last year. Before then, Samsung sold Apple memory for its iPod line, and continues to do so today. Apple is a huge customer for Samsung — so huge that it can command deep discounts, and tie up an enormous amount of Samsung's manufacturing capability. When Apple first launched its flash-memory iPod Nano, it locked up enough production to keep rivals off the market for months. (Even Samsung and SanDisk tried to launch me-too clones of the Nano, to no effect.) Regulators may block Samsung's SanDisk bid. But they ought to keep an eye on Apple, too. Antitrust cops tend to spend all their time watching for monopolies — sellers who wield undue influence over a market. They should crack open their investment glossaries and look up " monopsony" — the condition that exists when a buyer dominates a market. (Illustration via Apple Insider) Terms of Service Privacy Policy