Apple Pays $1.25B for Chips

The RED HERRING writes that Apple has maded agreements with several flash memory chip makers, including Intel and Micron, to provide the NAND components used in some iPod models through the end of the decade. According to the article, Apple "will prepay a combined $1.25 billion to Hynix, Intel, Micron, Samsung Electronics, and Toshiba over the next three months. The chip makers have agreed to deals running through 2010."

Mark DeVoss at iSuppli said, "I’ve never seen Apple reserve this many [components] before. They must have great plans for them."

DeVoss posited that the popularity of the nano and other NAND flash-based devices "could spell the end of small form-factor hard drive gadgets."

DeVoss said, "I think if companies aren’t in the [small hard-drive device] business, they won’t be getting into it." He added the NAND players will "create a threat at the lower end" of such hard-drive devices. He also noted that NAND chips are getting increasingly cheaper while hard drives have many fixed costs and cost between $50 and $70 to the BOM.