"There was nothing unfair about the businesses with Apple," the CEO of Samsung's semiconductor division, Hwang Chang-kyu, claims.
A Samsung executive said the Flash memory supplied to Apple was of the new MLC type. That is 30 to 40 percent cheaper than the type used by Apple's disgruntled Korean competitors, allowing the U.S. firm to outprice them. "The price difference may seem magnified since the only demand at the moment is from Apple," he added.

Unlike the more common SLC type, the new MLC can store two data units on one cell. Accordingly, product costs are lower and productivity is higher. Samsung started mass production this June.

Answering concerns that Samsung's cheap supply and the iPod Nano's consequent low price will strangle small or medium-sized local MP3 companies, Hwang said, "Eventually, the MLC and 4GB type will be provided to any company that wants it, but currently Apple seems to be the only one."

But he added, "It's true that the company that has the largest market will have the edge. Buying 100 units and buying one can't be same." He said it was difficult to satisfy all customers and win the market at the same time.

Hwang dismissed fears that the cozy deal between Samsung and Apple will affect Samsung's own MP3 division. "The NAND flash market is growing literally day by day, and the semiconductor business has to let the top companies release their products on time."

He said Samsung's flash memory is used in leading products such as Nokia and Motorola cell phones, Sony and Panasonic television systems, MS Xbox, Sony Playstation, and Nintendo Gamecube. "Distinguishing ‘your company' and ‘mine' isn't acceptable in developing new markets with leading companies."