Apple 'punishes' Samsung for 'gaffe'

Apple's penchant for all things secretive may have cost Samsung some business. The EE Times reports that Apple's has "punished" the South Korean semiconductor giant for revealing details about the forthcoming iPod before they authorized it. The report says that an apparent "gaffe" by an executive from Samsung Electronics has cost the South Korean semiconductor giant some of Apple's iPod chip business. The company has since decided to stick with SigmaTel, according to an analyst. "Despite signs that Samsung was taking over the iPod chip business, struggling SigmaTel has managed to hold on to its key chip design within Apple's current — and new — iPod Shuffle MP3 line, said Craig Berger, an analyst with Wedbush Morgan Securities Inc. (Los Angeles)."

"We have increased confidence that SigmaTel will continue supplying the MP3 processor into the Apple Shuffle in 2H '06, after a Samsung executive commented publicly that Samsung supplanted PortalPlayer in the next-generation iPod Nano," the said in the report. "It is not surprising that Apple would 'punish' Samsung for commenting publicly about its position within the iPod Nano follow-on, and we believe that SigmaTel is likely to be the resulting beneficiary of the Samsung executive's gaffe."

Apple current uses SigmaTel's media processor chip in its current entry-level, flash-based iPod shuffle and uses PortalPlayer's media processor chip within its current iPod nano line. The analyst said that Samsung will supply the media processor for Apple's new iPod nano, but not the next-generation Shuffle.

Last month, Samsung said it had landed a contract to supply some of the internal components on the next generation iPod, days after longtime iPod supplier Portal Player said that Apple would not use its chips for its future high-end iPods, The contract was said to be the largest LSI chip order for the company and was purportedly at the expense of Portal and other suppliers such as SigmaTel, Actions, and LSI Logic--all of whom were were also considered front-runners for the new iPod processor contract.

Filed under: iPod