Apple corners flash memory market with iPod nano

“Apple Computer got a bargain on the memory chips that make its new iPod Nano music players so slim. And in doing so, Apple has thrown the market for flash memory into a tizzy: forcing prices up for other manufacturers and driving prices down for consumers,” Damon Darlin reports for The New York Times News Service. “No analyst seems to know for sure what Apple paid Samsung Electronics for the memory chips; estimates range from $85 (U.S.) to $120 for a 4-gigabyte chip that goes into a $250 Nano, or about a 30 per cent discount in exchange for buying 40 per cent of Samsung’s output this year.”

Darlin reports, “But that big purchase has tightened supplies of flash memory chips for everyone else. The repercussions have been felt by about 200 minor makers of MP3 players in Asia, or about half the industry, which have gone out of business because they cannot get parts, said Nam Hyung Kim, principal analyst at the iSuppli Corp., a market analysis firm that specializes in semiconductors.”

Full article here.

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Related articles:
Disgruntled iPod also-rans accuse Samsung of ‘damage’ by selling Apple cheap NAND flash memory – September 29, 2005
Apple’s iPod nano forces price cuts on flash-based MP3 players in Taiwan – September 15, 2005
Apple’s music competition having tough time and the iPod nano won’t help them – September 14, 2005
Piper Jaffray: Apple seeing high demand for iPod nano – September 14, 2005
Apple iPod nano 32GB possible in second half 2006? Samsung unveils new flash memory NAND chips – September 12, 2005
Also-ran MP3 player makers miffed by Apple’s impossibly low price for iPod nano – September 09, 2005
Apple introduces iPod nano – September 07, 2005
Apple stomps competitors in flash-based MP3 player market – September 02, 2005

14 Comments

  1. RomeoDawg, How is Apple, (a hardware company) lame for buying a huge volume of flash to meet sales/ demand for a new product?

    MS is a software company that dabbles in gaming hardware. IF they were to buy a huge amount of a component to meet demand for the XBox, how would that be lame?

    iPod sales (HD & Flash) account for what, 70% of all sales? They purchashed only 40% of the inventory from ONE supplier of flash. How is anybody hurt? Except maybe Apple, who probably didn’t buy enough memory to meet the demand for their product?

  2. I to have to dissagree with comments suggesting Apple has done something wrong, or M$ like.

    I have to agree with Darknite that the issue is that Apple has simply out innovated the “competition”. Remember, none of them wanted these new smaller flash drives until Apple released the Nano.

    Apple has rightly contracted for the parts in the numbers it needs. It was able to do that because, according to Samsung, no else has yet placed an order.

    CEO of Samsung’s semiconductor dividion Wang is quoted as saying “Eventually, the MLC and 4GB type will be provided to any company that wants it, but currently Apple seems to be the only one.”

    http://english.chosun.com/w21data/html/news/200509/200509280023.html

    MDN: “First”

  3. First, the 200 Chinese OEMS going out of business were from one Taiwanese article.

    Second, there’s a Samsung spokesman who says the NAND flash Apple is using is NEW, and not based upon the same tech in the old NAND flash that other suppliers are using. Interestingly the new NAND flash is 30% cheaper to make, so the discount isn’t just because Apple bought the most, it bought a supply of new NAND that costs less to manufacture.

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