Ouch! Samsung Drops $10 Billion in Value After Apple Selects New Memory Chip Vendor for iPad and iPhone

Samsung and Apple are famous frenemies, battling one another in court after court over copyright violations while still working together to bring consumers their beloved iPads and iPhones.

While it looked like the two might work things out when the CEOs for both companies  agreed to discuss settlement terms, Samsung must be fuming over Apple’s latest move. The Cupertino-based company snubbed Samsung in favor of its chip rival Elpida, placing a huge order with the struggling company.

After Taiwan’s DigiTimes reported the news that Apple had ordered a huge amount of dynamic random access memory or DRAM from Elpida’s plant in Hiroshima, Japan, shares in Samsung Electronics Co dropped more than six percent on Wednesday, costing the South Korean company $10 billion in value.

The order is a big boost for Elpida, which was forced into bankruptcy protection after flagging chip sales. When the news broke, Samsung, who is the world’s biggest DRAM manufacturer, had the largest daily fall that it’s seen in the last four years. Another DRAM manufacturer, SK hynix, also closed nine percent lower, its biggest one day drop in the last nine months.

“It looks like Apple doesn’t want to see Samsung and hynix dominate the chip market. Apple wants to maintain its bargaining power by keeping Elpida running,” said LIG Investment & Securities analyst Choi Do-yeon.

“Samsung shares were already facing pressure since offshore investors began cutting back on risk during the latest streak of sell-offs, but the news surrounding Elpida was the straw that broke the camel’s back,” added Hyundai Securities analyst Roo Yong-suk.

Samsung has declined to comment on the situation.

[via Reuters]

email

About Juli: Contact me via Twitter: @julipuli