Samsung value drops $10bn on fear Apple has picked rival chip
SAMSUNG saw $10bn (£6.3bn) wiped off its market capitalisation on Tuesday following suggestions that Apple has placed a huge order for memory chips with a rival.
Shares in the South Korean electronics giant tumbled 6.2 per cent after Taiwanese site DigiTimes said Apple has bought half the capacity of a DRAM chip manufacturing plant operated by bankrupt Japanese firm Elpida.
SK hynix, another South Korean DRAM manufacturer, also saw its share price drop by nine per cent.
“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 Choi Do-yeon, an analyst at LIG Investment & Securities.
There is a global over-supply of DRAM chips, partly due to changes in consumer purchasing habits.
PCs use around four times as many such chips as Apple’s iPad – and the tablet computer’s success has hit sales of traditional machines, reducing demand.
In recent years firms such as Elpida invested heavily to increase capacity but were caught off-guard when demand dropped.
Samsung met 53.8 per cent of DRAM demand at the end of 2011.