Apple to buy at least 20% of Hynix’s NAND Flash chips through 2010

“Apple Computer Inc., the world’s largest maker of portable music players, agreed to buy at least 20 percent of Hynix Semiconductor Inc.’s NAND flash memory chips until 2010, according to the South Korean chipmaker,” Bloomberg reports. “Apple, which uses NAND as the main component for its iPod Nano music players, agreed in December to buy 40 million gigabytes of the chips this year from Hynix, according to the Ichon-based company’s annual report submitted to regulators today. Apple said it would increase orders by at least 180 percent a year until the end of the decade, according to the document.”

“Every quarter, Cupertino, California-based Apple will match orders to Hynix from the preceding three-month period or buy at least 20 percent of the company’s NAND production, whichever is larger, according to the document,” Bloomberg reports. “The chips will be sold at a price that won’t exceed what was specified in the December agreement, Hynix said, without specifying the amount.”

Full article here.

MacDailyNews Take: Are these all for iPods or will some of these NAND chips find their way into future MacBooks and/or other future Apple devices? In November, Intel Corp., the world’s largest semiconductor maker, and Micron Technology Inc. said they had agreed to form a joint venture, IM Flash Technologies LLC, to produce NAND flash memory chips. At the same time, the joint Intel-Micron venture announced that they had secured a $500-million deal to supply chips to Apple, which announced it plans to pre-pay a total of $1.25 billion for flash memory components during the next three months.

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Related articles:
Intel demos NAND flash memory laptops – March 08, 2006
Apple announces over 30 million iPods sold, reaches long-term supply agreements for flash memory – November 21, 2005

17 Comments

  1. The numbers are not really that huge. Think about it for a second.

    Assume for the first half of the year (through 1 July) Apple ships iPod nanos with the current 2 and 4 GB memories, and they ship in equal quantities. (I believe that more 4 GBs are sold than 2 GBs but let’s be conservative.) Then assume Apple upgrades the line to 4 and 8 GB nanos on 1 July and ships equal numbers of each for the rest of the year.

    This comes to only 8.9 million iPod nanos for all the memory they intend to buy from Hynix. I expect Apple to sell significantly more than just 8.9 million nanos this year — way more.

    Of course Apple has several other sources of memory, including the Intel-Micron deal mentioned by MDN, but there is the iPod shuffle too. There may even be other NAND memory based systems coming out before the end of the year.

    The bottom line as I see it… these numbers are right in line with what I would expect — for this year at least.

    The most interesting part is the statement “or buy at least 20 percent of the company’s NAND production, whichever is larger”. This would imply to me that Apple is not concerned about how many chips Hynix can make. Apple expects to be able to sell enough systems to buy at least 20% of whatever Hynix makes — no matter how far Hynix ramps up production (plus the commitments to its other vendors).

    That’s a pretty bold prediction (and commitment) because Hynix could arrange for financing to put in a completely new fab line and double or triple production within the next 3.75 years.

  2. I believe the first flash-memory based Apple Pro notebooks will be introduced this year
    – probably at the end of the year – and they’ll have about 30GB of memory.

    [They might even have an additional built-in hard disk as a backup.]

    With the next generation of Core Duo processors, they’ll be amazingly fast.

  3. @ Shadowself
    Considering how for the past 3 pre-Christmas shopping periods Apple has been struggling to meet worldwide iPod demand despite selling 14.5million iPods in the run up to Christmas last year it would be nice to think Apple might actually be able to meet world wide iPod demand for once in the history of the iPod. So maybe 40million+ iPods to be sold worldwide in the run-up to Christmas 2006 ontop of the iPods sold during the year.

  4. Apple does not want parts availability to get in the way of product sales. They are making damn sure they’ve got chips to build gadgets with.

    It would not be beyond reason for an Apple competitor to gobble up mass quantities to impair Apple’s ability to deliver product and cause the iPod to falter in the market place.

    Even if a competitor didn’t have an immediate need for the chips they could buy them to constrain Apple, dump the chips at discount prices later and write-down the loss as part of the cost to dethrone the iPod.

    Kudos to Apple for securing good component availability in advance.

  5. Apple stock was headed down to under $55 if it wasnt for the news, most buyers only got in because the stock was going to close ” POSITIVE” for the first time in days, so they were SHORT TERM buyers, they bought because they knew more buyers would come in the next day, and they did yesterday, and today is friday, short termers usually dont like staying in stocks during the weekends. Which means there is going to be a huge sell off today.

    And noone should count on apple releasing something cool on its 30th birthday, it’ll be another ipod-wifi dissapointment style decline next week. because everyone is counting on it.

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