NAND Flash Memory Supply Prioritized for Apple, Causes Worldwide Shortage

NAND-type flash memory modules are widely used in smartphones for users to store pictures, music, videos, games and other files. As Apple’s iPhone and iPod continue to consume a huge amount of NAND flash memory, cell phone makers have been undergoing a serious worldwide shortage of these memory chips, reported DigiTimes.

Apple has been increasing the storage capacities on iPhone and iPod Touch every year. The iPhone 3G S is embedded with 32GB of onboard storage, while the capacity of the iPod touch is recently doubled from 32GB to 64GB. In addition, the iPhone is expected to land the massive Chinese market through China Unicom in the forth quarter of 2009. Both factors drive up the need for NAND flash memory, gobbling up the chips in an unprecedented rate.

According to a report from DigiTimes, the world’s major NAND chip suppliers are giving priority to Apple’s increased flash demands, while limiting the supply provided to other companies. For instance, Samsung Electronics has announced that it will reduce its NAND flash supply by half in September. Micron Technology has also told some of its customers that they cannot provide any NAND flash chip at the moment, according to sources. Similarly, Toshiba and Hynix Semiconductor are putting Apple on the top of the list and are offering limited stock to the spot market. The tight supply is expected to until the end of this year.

In fact, the reason for Apple’s privilege is the long-term supply agreements Apple signed with Samsung, Intel, Hynix, Micron and Toshiba dated back in November 2005. The agreements assure that the manufacturers would provide ample supplies of NAND chips to Apple through 2010, with a prepayment of $250 million to each of them.

Meanwhile, NAND flash price has also been rising steadily, with the average price for a 16GB chip increased by 7.2% to US$4.48 in the first half of September, while a 32GB chip now costs US$6.80, up by 4.3%, said e-marketplace DRAMeXchange.

Currently, Apple is negotiating with China Mobile, the largest wireless network in the world, hoping to bring its iPhone to the carrier’s half-billion subscriber base. If Apple reach an agreement with China Mobile, iPhone sales will grow tremendously and demand for NAND chips will be further tightened.

Tags: iPhone Accessories, Apple iPhone 3G Accessories, Apple iPhone 3G S Accessories, MP3 / Apple Ipod Accessory, Apple iPod touch (1st generation) Accessories, Apple iPod touch (2nd generation) Accessories, Samsung Accessories