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Monday, November 30, 2009, 09:15 am PT (12:15 pm ET)

Apple accused of NAND flash memory price manipulation

Apple has been accused by anonymous industry sources of utilizing "bully" tactics to manipulate NAND flash memory prices to the hardware maker's advantage.

According to The Korea Times, Apple has leveraged its power against major companies like Samsung and Hynix Semiconductor through the popularity of the iPhone and its line of iPods. The company has been accused of suppressing flash memory prices by ordering more chips from semiconductor makers than it actually buys.

Quoting a nameless "senior industry official," the report stated that Apple has asked Korean semiconductor companies to make a certain amount of chips. But the Cupertino, Calif., company allegedly does not purchase the volume it requests.

Instead, sources said, Apple simply waits until chip prices fall to levels the company finds acceptable. Then it purchases its allotment at a price that meets its internal expectations.

Another official called Apple's tactics "absurd," and suggested that the strategy will hurt the health of the NAND flash industry. Prices of flash memory chips are said to have dropped 4 percent this month.

Twice recently, Apple was accused of causing a worldwide NAND flash shortage. Demand for flash memory was said to have been outstripped by supply for major manufacturers as the iPod and iPhone continue to sell millions of units. Demand in the third quarter of 2009 was said to have exceeded supply by 1.3 percent.

The capacity of memory in Apple's flash memory devices has grown exponentially over the years. In September, the company unveiled its largest-ever 64GB iPod touch for $399, doubling the previous largest 32GB offering.