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Apple lands iPod memory deals
Music player giant says it has inked contracts with Hynix, Intel, Micron, Samsung Electronics, and Toshiba to lock up flash memory chips through 2010.
Apple Computer said today it was willing to pony up $1.25 billion in advance to make sure it gets the flash memory chips it needs for its line of iPod music players, staving off an expected surge in market demand for the chips.
The iPod maker will make the payments over the next three months to secure steady NAND flash memory chip production through 2010 from Hynix Semiconductor Inc., Intel Corp., Micron Technology Inc., Samsung Electronics Co. Ltd., and Toshiba Corp.
"We want to be able to produce as many of our wildly popular iPods as the market demands," Apple CEO Steve Jobs said in a statement.
Apple said it has sold more than 30 million iPods since their introduction in October 2001. The company said it sold one million pencil-thin iPod nanos in the first 17 days after it debuted in early September.
The announcement comes just weeks after Apple reportedly broke off talks with Samsung on a joint venture into production of flash memory chips, which allow device makers to increase storage capacity while keeping the devices small.
In a related announcement, Intel and Micron said today they have formed IM Flash Technologies LLC, a new company to manufacture NAND chips, with an initial investment of $1.2 billion each. The companies said that Apple would pay $250 million to each company for a "significant portion" of the venture's NAND flash memory output.
The deal struck a blow to flash memory maker SanDisk, which saw its stock drop $9.36, or nearly 17 percent, to $46.84 on the day.
Shares in Apple rose slightly on the day to finish at $64.96, up 40 cents.
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