As an effort to secure enough NAND flash resource for its upcoming 3G iPhone and potential next generation iPod, Apple has made a pre-order of about 50 million units of 8GB NAND flash memory chips from Samsung Electronics. Apple has ordered 25 million of flash memory chips in June and the rest is expected to happen by second half of 2008.
Samsung is the major memory flash provider for Apple since its first generation iPhone. No doubt, the huge volume of NAND flash ordering has certainly set a perception of high confidence level on Apple’s future products to all market analysts and consumers. Even back to year 2005, Apple was so optimistic about its future product roadmap that triggered a long term supply agreement with few major flash memory manufacturers such as Hynix, Micron, Toshiba and Intel to continue getting the flash supply until 2010 with a pre-payment of $1.25 billion.
Apple has set its own goal to produce a total of 10 million iPhone by end of this year. By having all these preorder units based on forecast, Apple is very confident that it will exceed its objective with sufficient flash memory supply secure by this order. Also, some analysts speculate that there could be allocation for its next generation iPod that may be released by September this year. On the other hand, this action will definitely cause flash memory supply shortage to other customers especially some Apple’s competitors. This could be a strategic move by able to work closely with eco-partners and eliminate the potential threat from competitors.