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An unconfirmed report today from Reuters quotes an industry analyst firm iSuppli as saying that Apple (Nasdaq: AAPL) plans to buy as much as 40 percent of Samsung's second-half flash memory output.
The NAND flash memory cards will be used in a new, 4 GB iPod Mini, which Apple would release in time for the holiday shopping season, the report stated. The current version of the 4 GB mini contains a hard drive. Apple's iPod Shuffle uses flash memory.
Good for Mobile, Bad for Wallet
Flash memory cards offer some advantages over hard drives in portable devices; they have no moving parts, so are shock resistant and less likely to break with a lot of jostling, they also use less power, can read and write data more quickly and don't make noise. The downside is their higher cost.
Analysts speculate that Samsung would have to lower the price of its flash memory by 50 percent to make the cards an attractive option for inclusion in the iPod Mini.
Attempts to confirm the report through Apple went unanswered, and Samsung, the world's largest manufacturer of NAND flash memory, said it does not comment on deals with customers.
Falling Costs
While flash memory is in high demand, prices for the cards have been dropping.
"In general, prices for flash memory have fallen drastically over the past year, but it has slowed down slightly in the past couple of months," Shawny Chen, data analyst with Current Analysis, told TechNewsWorld.
If the report is true, Apple's purchase could drive change in the flash memory market, Chen said.
"If Apple purchases 40 percent of Samsung's NAND flash memory for its iPod mini, digital audio player manufacturers would follow, especially since Apple commands the digital audio player market and the iPod mini is one of its bestsellers," Chen said.
Aiming at the 'Sweet Spot'
"Microdrive-based (4 GB to 6 GB capacity) digital audio players are the sweet spot for flash memory," the analyst explained. "Demand for flash memory would gain momentum from the digital audio market. At the same time, flash memory demand is also highly driven from the digital camera and mobile phones markets."
If Apple steps up production of iPods using NAND flash memory during the holiday season, when about 50 percent of its sales are made, it could create a shortage of the cards.
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