Apple, On Huge Order, Breaks NAND Flash Supply

Samsung Electronics, one of the world’s largest semiconductor manufacturers, has according to Digitimes informed downstream customers it will start reducing its supply of NAND flash chips to them from July as its key customer Apple (AAPL), has placed a large batch of orders (the order is said to be for 50-million “8Gb-equivalent”) that should cover all iPod and iPhone models for the second half of the year.

This order follows a June procurement for 25 million of the same chips.

This latest report reflects an increasing shift towards the use of flash in Apple’s portable devices, including the iPhone.

Samsung Electronics, one of the world’s largest semiconductor manufacturers, according to Digitimes, has informed downstream customers - it will start reducing its supply of NAND flash chips to them from July as its key customer Apple, has placed a large batch of orders (the order is said to be for 50-million “8Gb-equivalent”) that should cover all iPod and iPhone models for the second half of the year.

This order follows a June procurement for 25 million of the same chips.

This latest report reflects an increasing shift towards the use of flash in Apple’s portable devices, including the iPhone.

Samsung has also been readying 8GB flash chips that should allow larger-capacity players within the same timeframe as the claimed supply spike.

In addition to the Apple orders, supply will also be reduced because of a capacity adjustment Samsung made in May. The chip maker allotted less capacity for NAND flash production during April and May in attempts to reduce oversupply, which should be reflected in actual output in July, the sources said.

2008 hasn’t been exactly a banner year for NAND manufacturers. As of mid June, the spot price for 8Gb of NAND flash fell to just $2.32. NAND prices tend to drop quickly—8Gb of MLC NAND flash was $8.25 on June 15, 2007, and $3.14 in January.

Despite an apparent sharp drop in NAND flash, the sources said industry players are still doubtful about the impact from the Apple orders. They noted that Apple already landed a batch of 25 million 8Gb-equivalent NAND flash chips from Samsung in June and commented that ongoing procurement will depend largely on iPhone sales.

Samsung has also been readying 8GB flash chips that should allow larger-capacity players within the same timeframe as the claimed supply spike.

In addition to the Apple orders, supply will also be reduced because of a capacity adjustment Samsung made in May. The chip maker allotted less capacity for NAND flash production during April and May in attempts to reduce oversupply, which should be reflected in actual output in July, the sources said.

2008 hasn’t been exactly a banner year for NAND manufacturers. As of mid June, the spot price for 8Gb of NAND flash fell to just $2.32. NAND prices tend to drop quickly—8Gb of MLC NAND flash was $8.25 on June 15, 2007, and $3.14 in January.

Despite an apparent sharp drop in NAND flash, the sources said industry players are still doubtful about the impact from the Apple orders. They noted that Apple already landed a batch of 25 million 8Gb-equivalent NAND flash chips from Samsung in June and commented that ongoing procurement will depend largely on iPhone sales.

Comments

[wallawallabingbang]

Wallstreet should wake up.

[Tommo_UK]

Wall Street can't see through its darkened Windows (geddit? haha - groan) and is blind to the Apple delivery trucks zooming past them all over the world delivering 61% Mac sales growth and rolling out the iPhone to 75 countries.

But what do you expect from a bunch of numbskulls sat behind their Dells trading in their cubicles: inshight, imagination, and cutting edge analysis?

[fauxscot]

Wow. This post repeats itself in several places.
Wow. This post repeats itself in several places.
Wow. This post repeats itself in several places.

[offtheobt]

Reading between the lines: Apple is expecting to sell a whole buncha iPhones. Since Apple's guidance is notoriously conservative, they will probably sell a WHOLE BUNCHA MORE iPhones! All Apple's compeditors and falling all over themselves coming out with lame "iPhone-killers-o... which will eventually improve the level of quality of phones, but they are still running a couple of years behind, with scant prospects of catching up. Apple is a fast-moving target!

[Toni]

Doris ? Are we at 200 ?

[Jon T]

25 million iPhones sold in 2008...

My prediction from July 2007.

As I am one of many who chose to wait for iPhone 2, this has to be possible.

[digivision]

25 mil is very possible if not conservative

[digivision]

the big jumps will be back to school and christmas of course

[NetworkEffect]

its called market manipulation folks. people with a lot of money want apple to go down because that is their position this month. so they make it go down because they have a lot of money and they are the market. in the short term, you can make a stock price go wherever you want if you have enough money and you have media at your fingertips to influence the lemmings.

[bobthenoob]

I've got cash in hand ready to buy two 16gb iPhones 2.0.
It's amazing that I actually made money selling both of our old iPhones 1.0 at eBay for $399 and $475.

Of course, there's going to be AAPL bashers telling me that I'm paying $20 more a month but I'll gladly spend that for 3X speed and the time savings not waiting for the pages to load :P I don't care much about text messaging so we're not spending a penny more, just $100 month family plan we pay now + $20 increase after we get the new iPhones. Anyway, I'm sure SMS will be replaced by free iChat once it's released for the iPhone.

[mollytjm]

investors are running so scared that they're missing what's happening at Apple. understandable, since it's a scary market these days...but... Apple is making $ hand over fist and that will just increase. obviously the market is capable of battering even the best company. Apple's weathered worse and they'll survive this panic too.

[Partners inGrime]

The number of 8GB iPod touches Apple will move this back-to-school season will border on crazy. This is the best education offer I've seen from Apple.