In 2002 Hwang rolled out his new system, called “Hwang’s law,” paying
homage to “Moore’s law,” a term coined by Intel co-founder Gordon Moore
in 1965. Moore had predicted that semiconductors would double their
computing power every two years, bringing down the costs of any business
model that relies on computing and powering the economy of the future.
Hwang’s law was Samsung’s steroids-injected version of this industry
dictum. Memory density, Hwang predicted, would double every year.
Samsung engineers did just that, applying Hwang’s law to innovate at a pace
unseen in the industry. By 2004 Samsung flash memory was advanced
enough to meet Apple’s needs. Hwang just needed to convince the
fastidious, finicky Jobs of that.
“This is exactly what I wanted,” Jobs said of Samsung’s flash memory,
according to Hwang. He agreed to make Samsung the sole supplier of flash
memory for the iPod.
“It was the moment that marked the beginning of our dominance in the
U.S. semiconductor market,” Hwang wrote. With that, Samsung had a
launchpad from which to eventually get into smartphones, when they came
out. They would go from supplier to competitor.
But soon there were signs of trouble in the new, fragile relationship.
Samsung executives had already been gathering with competitors at hotels
and golf courses for what were called “Glass Meetings,” “Green Meetings,”
and “Crystal Meetings,” colluding to fix the prices of LCDs and DRAM
chips—components that Apple and others depended on. Samsung’s
executives heard rumors that a powerful customer, which they had code-
named NYer, was onto them. NYer, in reality, was Apple. “Samsung ran to
the Justice Department [in 2006] under an anti-trust leniency program and
ratted out its co-conspirators,” wrote Kurt Eichenwald in Vanity Fair. “But
that didn’t lessen the pain much—the company was still forced to pay
hundreds of millions of dollars to settle claims against it by state attorneys
general and direct purchasers of L.C.D.’s.”
In September of that year, one of the Samsung executives who had been
present at a meeting with Jobs, Tom Quinn, a vice president for memory
marketing in the United States, pleaded guilty and agreed to serve eight
months in prison for his role in the DRAM price-fixing conspiracy. He was
joined by five other Samsung executives.
Apple, however, kept Samsung as a supplier. The relationship was
simply too valuable to the company to sever it. It turned out to be a wise