Apple Snub Has Samsung Tumbling
A combination of factors helped rip a chunk out of Samsung’s market capitalization as its shares fell over 6 percent Wednesday, reacting primarily to reports that Apple (NASDAQ:AAPL) had placed large chip orders to Japanese rival .
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“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,” said Rhoo Yong-suk, an analyst at Hyundai Securities. “It was just unfortunate timing that coincided with jitters surrounding Greece.”
A report in Taiwan’s DigiTimes, citing unnamed industry sources, said that Apple had placed substantial orders for mobile dynamic random access memory chips to Elpida’s 12-inch plant in Hiroshima, Japan.
The orders reportedly took up half the unit’s production and come in the wake of U.S. company Micron Technology Corp.’s (NASDAQ:MU) recent talks to acquire Elpida’s operations after it was forced into bankruptcy protection due to adverse market conditions.
Apple’s move makes eminent supply chain sense, according to Choi Do-yeon, an analyst at LIG Investment & Securities, who said, “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.”
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