Apple seeks cheaper flash memory for iPhone, video iPod and notebooks

Apple's quest to reduce product costs has been bad news for memory manufacturer, Micron Technology, industry sources say. “We're hearing that Apple has significantly reduced its NAND flash purchasing at Micron,” report analysts at WR Hambrecht and Co in a briefing released this week.

Apple is believed to have switched flash memory orders to Korea's Hynix as it attempts to reduce prices of the forthcoming iPhone, the iPod series and other products. Apple is rumored to be working a flash memory-based video iPod, and a flash-based laptop PC, vastly increasing its demand for flash memory. A 16MB flash-based player is "likely" from Apple this year, according to WR Hambrecht.

Flash memory chips for a 16GB product will cost Apple $2.5 per gigabyte or less, according to Hambrecht semiconductor analyst Daniel Amir. While this is three times more expensive than hard disk storage - at around $0.8 per gigabyte for Seagate's 1.8-inch 30GB drive - it brings considerable savings in power, size, weight and reliability.

Micron has been a key supplier of flash to Apple for several years, providing approximately half of Apple's flash demand. The company had been expected to win even more orders for flash memory for the forecast flash-based video iPod and sub-notebook but those hopes appear to have been dashed.

Despite cutting its asking price for NAND flash, to the point where its profit margin is “crushed', analysts say, US-based Micron has been unable to hold on to most of these potential orders.

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