Apple Gobbles Up 50M Samsung NAND Chips

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News Posted: Wed, Jul 2 2008 9:43 AM

Samsung has started spreading the word to its customers that NAND flash memory chips are going to be harder to come by for a little while as Samsung diverts much of its available supply to Apple. When Apple places an order for 50 million 8GB NAND chips, it shouldn't be a surprise that Apple gets to cut the line and is offered a spot at the front of the queue. 

NAND flash memory chips are used in USB flash drives, MP3 players, cell phones, and other small-form-factor consumer electronics devices. What does Apple need with 50 million NAND chips? Two words: 3G iPhone. Apple is gearing up to distribute the new 3G iPhone starting next week in no less than 70 countries--and at a significantly reduced cost (not counting service contracts) than the original iPhone. A worldwide recession notwithstanding, it appears that Apple is betting that the current state of the economy won't but a damper on iPhone sales.



DigiTimes reports that Samsung's available NAND chip supply is also reduced because "the chip maker allotted less capacity for NAND flash production during April and May in attempts to reduce oversupply, which should be reflected in actual output in July." DigiTimes also added a caveat that despite these reductions, it is uncertain how much of an impact this will have on NAND chip availability to Samsung's other customers: 

"Despite an apparent sharp drop in NAND flash, the sources said industry players are still doubtful about the impact from the Apple orders. They noted that Apple already landed a batch of 25 million 8Gb-equivalent NAND flash chips from Samsung in June and commented that ongoing procurement will depend largely on iPhone sales."

Market research company iSuppli reports that "Apple was the world's third largest OEM buyer of NAND flash memory in 2007, with purchases of $1.2 billion, representing 13.1 percent of the global market." So does this mean that other non-Apple 3G iPhone consumer products that use NAND flash memory chips will be harder to come by in the next few months? On one hand, iSupply states that there has been so much of a glut of NAND chips on the market lately that NAND prices keep dropping. On the other hand, iSuppli also reports that NAND manufacturers have been reducing NAND production in order to stem the price drops.

Regardless of how the NAND market plays out, it looks like Apple is sitting on top of a mountain of NAND chips ready to populate its worldwide invasion of 3G iPhones. What these means for other consumer electronics device manufacturers, still remains to be seen.



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ice91785 replied on Sun, Jul 6 2008 11:07 PM

 If anything it seems as if this shortage of supply may in fact slightly drive up prices of other devices that use SAMSUNGS NAND flash memory....nice work Apple; especially since they own much of the supply they could in-fact take advantage of the shortage and drive up their own prices...........

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