Monday, November 21, 2005
Apple Computer on Monday said it would prepay $1.25 billion to secure its supply of flash memory used in its market-dominating iPod music players amid an expected surge in demand for the chips.
Apple said it would make the payment over the next three months in a series of agreements to lock up flash supply through 2010 with five leading manufacturers: Hynix Semiconductor, Intel Corp., Micron Technology Inc., Samsung Electronics and Toshiba Corp.
"It's critical that (Apple) tie up capacity," said Jefferies & Co. analyst John Lau. "They need to secure a reliable source to fund their continued expansion into this area."
Apple, which uses the chips in its portable iPod shuffle and recently introduced nano music players, has sought in recent weeks to ensure a greater supply going forward. The company had held ill-fated talks with No. 1 manufacturer Samsung to invest in flash chip production earlier this year.
Apple has sold more than 30 million iPods to date, the company said.
