Amid Weakened NAND Flash Demand, Apple Reportedly Looking to Negotiate Long-Term Deals

[MacRumors]

DigiTimes reports that industry demand for NAND flash memory of the type used in iPhones, iPod touches, and now iPads has been relatively weak of late, but Apple has been reluctant to enter into deals with suppliers who have taken steps to prop up prices by limiting the supply reaching the market. According to the report, Apple is now preparing, however, to assert its influence over the market and begin negotiations for longer-term contracts as it undoubtedly begins to ramp toward another iPhone revision later this year.

NAND flash demand has been weak, but pricing has been stable as major suppliers are limiting their supply to the market.

But the sources said Apple may start negotiating long-term supply contracts with its chip partners in the second quarter. Apple's demand will continue to play a significant role in the NAND flash industry in 2010.

A report last October suggested that NAND supply-demand balance would tip back into positive territory early this year after the holiday rush, but tight supplies are again a concern as Apple looks to soak up more of the available industry capacity.

In 2005, Apple announced a long-term NAND flash memory agreement with a number of suppliers that was expected to carry through 2010, although Apple's product lineup has obviously grown by leaps and bounds since that time with tremendous growth in its iPod line accompanied by the iPhone and now the iPad.

Article Link: Amid Weakened NAND Flash Demand, Apple Reportedly Looking to Negotiate Long-Term Deals

 

[jo0]

NAND is out, quantum storage is in.

 

[Waterboy4]

Nothing but good news in this.

 

[cvaldes]

Nothing but good news in this.

Good news for Apple and its customers.

Not so good news for Apple's competitors and their customers who might end up paying higher prices for NAND, especially if they buy on the spot market.

As an AAPL stockholder, I encourage Apple to use their position to leverage better prices for components. It's a fine way to run your business and increase shareholder value.

 

[smileyborg]

Where are my 64GB & 128GB iPhones?

 

[diabolic]

Nothing but good news in this.

Definitely, but I'm sure someone will complain about it somehow.

 

[cvaldes]

Definitely, but I'm sure someone will complain about it somehow.

Let's see, which complaint will it be?

"OMG, why is Apple wasting its time with NAND? Why aren't they upgrading the MacBook Pro?"

Or AppleTV. Or 30" Cinema Display. Or Mac Pro. Or Final Cut Express. Or iPhone OS. Or OpenGL ES 3.0. Or some random printer driver. Or...

Just take your pick. The whiners are headed this way...

 

[cvaldes]

Where are my 64GB & 128GB iPhones?

The 64GB iPhone is somewhere in Cupertino on a tray draped under black cloth or locked up in a secure engineering lab.

The 128GB iPhone is stored in someone's CAD project file. It probably won't boot up for another nine months so don't hold your breath.

 

[2002cbr600f4i]

Wasn't there just a story in the fall about how people were complaining that Apple had sucked up all the available supply of NAND chips being produced through a good portion of this year? How the HECK can demand be DOWN if there's little available supply out there for non-Apple products??? If anything I would think Demand is high and supply is low!

 

[cvaldes]

Wasn't there just a story in the fall about how people were complaining that Apple had sucked up all the available supply of NAND chips being produced through a good portion of this year? How the HECK can demand be DOWN if there's little available supply out there for non-Apple products??? If anything I would think Demand is high and supply is low!

Well, if the people complaining about it were forum commenters, we now know how much their opinions weigh.

Apple made a $500M prepayment to Toshiba last July for NAND memory, but analysts noted that amounts to about one quarter's worth of chip supplies for Apple.

What Apple is probably doing is posting occasional larger orders that suck up short-term availability of the highest-capacity NAND memory modules, shutting out their competitors desirous of the same parts.

 

[Tones2]

The 64GB iPhone is somewhere in Cupertino on a tray draped under black cloth or locked up in a secure engineering lab.

The 128GB iPhone is stored in someone's CAD project file. It probably won't boot up for another nine months so don't hold your breath.

In all seriousness though, I LOVE to see a 64GB iPhone and 128 GB iPod Touch this year. Unless there is a complete redesign of both, though, that would mean that 64 GB flash modules would have to be available at a reasonable price, and given that NAND flash prices have been steady, the cost of putting a 64 GB module in either would be way too costly. Too bad, though, since that means I have to hold onto my now seemingly really dated160 GB iPod Classic another year.

Tony

 

[alent1234]

Wasn't there just a story in the fall about how people were complaining that Apple had sucked up all the available supply of NAND chips being produced through a good portion of this year? How the HECK can demand be DOWN if there's little available supply out there for non-Apple products??? If anything I would think Demand is high and supply is low!

not like the NAND companies didn't expand production. Toshiba doubled density of their NAND chips late last year. And Intel started producing NAND on their 25nm process which will show up later this year in devices. i think it will double density over Toshiba's newest NAND.

 

[kdarling]

Yep, here's last Fall's story from here at MacRumors:

Apple accused of manipulating NAND Flash prices

"Apple's strategy reportedly involves requesting that memory manufacturers produce a certain amount of flash memory, but ultimately purchases a lesser amount than that requested.

The reduction in purchase amount relative to industry projections based on Apple's supply requests creates an oversupply of the flash chips, driving prices down and allowing Apple to lock in its orders at a lower price as suppliers compete to unload their chips."

Didn't we all say at the time, that NAND producers would be "once burned, twice wary" ? Which would all explain why, this time, Apple will have to sign longterm deals.

 

[Jaro65]

Where are my 64GB & 128GB iPhones?

Not sure about 128GB, but 64GB should be here in about 3 months. I'm waiting for that one also.

 

[cvaldes]

In all seriousness though, I LOVE to see a 64GB iPhone and 128 GB iPod Touch this year. Unless there is a complete redesign of both, though, that would mean that 64 GB flash modules would have to be available at a reasonable price, and given that NAND flash prices have been steady, the cost of putting a 64 GB module in either would be way too costly.

Given that we are at 32GB and 64GB for the current iPhone and iPod touch respectively, I don't see the jump to 64GB/128GB as all that far-fetched even if they release completely redesigned devices (which is probable).

The chip manufacturers have invested billions into upgrading their facilities to provide the 25nm parts. The two sides will have to negotiate the prices (and maybe long-term contracts), but right now, Apple has the upper hand. There is excess, unused capacity right now.

It's a buyer's market.

 

[alent1234]

Yep, here's last Fall's story from here at MacRumors:

Apple accused of manipulating NAND Flash prices

"Apple's strategy reportedly involves requesting that memory manufacturers produce a certain amount of flash memory, but ultimately purchases a lesser amount than that requested.

The reduction in purchase amount relative to industry projections based on Apple's supply requests creates an oversupply of the flash chips, driving prices down and allowing Apple to lock in its orders at a lower price as suppliers compete to unload their chips."

Didn't we all say at the time, that NAND producers would be "once burned, twice wary" ? Which would all explain why, this time, Apple will have to sign longterm deals.

combine that with changing the iphone revenue recognition model and it seems Apple is playing accounting games

 

[nickane]

If they could skip a year's worth of flash updates that would suit me. At this rate I won't be able to abandon my 2.5 y.o. 160GB ipod until they launch a 256GB iphone in June 2012. I'm sick of ppl on public transport scowling when they see me browsing the internet on my iphone whilst skipping tracks on my classic.

 

[Tones2]

I'm trying to figure out how much 64 GB NAND flash modules actually cost. Does the iPhone use MLC or SLC flash?

Tony

 

[intel]

Let's see, which complaint will it be?

"OMG, why is Apple wasting its time with NAND? Why aren't they upgrading the MacBook Pro?"

Or AppleTV. Or 30" Cinema Display. Or Mac Pro. Or Final Cut Express. Or iPhone OS. Or OpenGL ES 3.0. Or some random printer driver. Or...

Just take your pick. The whiners are headed this way...

All of the above.

 

[cvaldes]

I'm trying to figure out how much 64 GB NAND flash modules actually cost. Does the iPhone use MLC or SLC flash?

The iPhone uses MLC modules. According to iSuppli, the 16GB part in the iPhone 3GS costs Apple $24.

My Google search parameters were: "iphone 3gs bom"

 

[intel]

I don't see why the flash companies don't start putting the flash chips in a box the size of the large hard drives then include some built in hardware raid and make a super fast sata hard drive that i can put in my mac pro. I'm sure the demand will definitely go up then. To me it seems like a no brainer. No?
http://www.youtube.com/watch?v=96dWOEa4Djs <==this but built into one large hard drive for desktop computers.

Near instant boot, super fast performance etc.
Everyone does say that the hard drive is a bottleneck in today's computers.
I'm sure that the investment for this idea will eventually pay for itself.
There, i gave them the idea, and i haven't patented it, i'm willing to give my services for free but i do ask to be given 10 of them when they are released, thank you.

 

[cvaldes]

I don't see why the flash companies don't start putting the flash chips in a box the size of the large hard drives then include some built in hardware raid and make a super fast sata hard drive that i can put in my mac pro. I'm sure the demand will definitely go up then. To me it seems like a no brainer. No?

Companies have been making these for years. They're called solid-state drives (SSDs). There are various pros and cons about the two main flash memory technologies, MLC and SLC: cost, speed, longevity, etc.

The current pricing is prohibitively high for consumer use. SSDs are increasingly popular in certain enterprise applications, especially ones that feature a lot of random access of fairly small data. SSDs provide fewer performance improvements when you are reading a large contiguous block of data (e.g., video playback).

Search The Fine Web for more information about this topic. Plenty has been written about this and multiple companies are marketing SSDs.

You can buy them at the usual places (Fry's, Amazon.com, Newegg, CDW, etc.).

 

[Tones2]

The iPhone uses MLC modules. According to iSuppli, the 16GB part in the iPhone 3GS costs Apple $24.

My Google search parameters were: "iphone 3gs bom"

Well, if that's true, the price seems to have dropped SIGNIFICANTLY, with 32 GB modules around $7, 64 GB around $15, and 128 GB around $30, as quoted here:

http://www.inspectrumtech.com/DP/NANDFlashSpotPrice.aspx

But I can't believe it's that cheap - so I must be making an invalid comparison in some way. If NOT, it would appear that 64 GB iPhones and 128 GB iPod Touch's are a certainty for this year. With 128 GB iPhone a fairly certain possibility in 2011, if not sooner. Heck, I'D pay an extra $50 for a 128 GB iPhone!

Tony

 

[giosaccone]

Not sure about 128GB, but 64GB should be here in about 3 months. I'm waiting for that one also.

I agree with You, I'm not sure about 128 GB

 

[JAT]

combine that with changing the iphone revenue recognition model and it seems Apple is playing accounting games

Wow! Triple redundancy!

So is everyone else. Why I have a job, and any time I don't, I can find one inside of a week.