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Where Will Apple Get Flash Memory Now?
An anonymous reader writes "EE Times examines whether Samsung could be about to control the equipment output of Apple by putting the Cupertino company on a rationed supply of NAND flash as the non-volatile memory goes into short supply in 2013. The analysis argues that Apple may need to put down billions of dollars of cash to fund a guaranteed NAND flash supply plan, something that Samsung did in the middle of the last decade."
they could probably pay someone to assemble the bits by hand under an electron microscope.
Because Wikipedia: "Anobit Technologies, Ltd. is an Israeli fabless designer of flash memory controllers." For the reading impaired, this means that they design memory controllers, not memory chips, and they only design them, they don't make them.
Every time a company is not 100% vertically integrated you get these kind of fearmongering articles. NAND flash is a commodity, they can find it somewhere else.
If Steve Jobs were still alive, he'd just find the next big thing, and stop using NAND flash. Memristors anyone?
Of course, if anyone else tried this, the new tech would be non-viable, but Steve would use his force of will to make the new tech work at the price he wanted to pay.
All ideas^H^H^H^H^Hprocesses in this post are Patent Pending. (as well as the process of patenting all postings)
this is not a school yard
samsung borrowed lots of money to build high tech flash memory factories. they can play hardball with apple, but they need to have a customer lined up to buy up whatever apple doesn't. unused capacity means lost revenue while salaries and interest on the debt still has to be paid
Well the story assumes that Apple hasn't already secured their supply. This story from 2005 reports how Apple made 5-year deals with 5 different manufacturers to secure their supply. The deals have since run out but it doesn't take a grand strategist to guess that Apple may have negotiated new deals. Remember Apple is very secretive so that may not announced to the world all their plans. Also, Apple has been known to front money to their suppliers in exchange for guaranteed supplies. Today they are sitting on billions in cash.
I doubt such a deal could remain secret due to SEC filings from Apple. Not to mention the fact that the suppliers will want to say "Look at us! We just got a billion dollars!" so that they may boost their stock prices. If we haven't heard about Apple making such a deal, then it probably hasn't happened. And it may not happen easily. Everyone is using flash storage now, and there is likely to be a lot of concern over supply. The big players may not want to make a deal with Apple to guarantee a supply so that they do not artificially limit the supply for their own products. Of course with a few extra billion, you could possibly increase your production significantly.
Well the story assumes that Apple hasn't already secured their supply. This story from 2005 reports how Apple made 5-year deals with 5 different manufacturers to secure their supply. The deals have since run out but it doesn't take a grand strategist to guess that Apple may have negotiated new deals. Remember Apple is very secretive so that may not announced to the world all their plans. Also, Apple has been known to front money to their suppliers in exchange for guaranteed supplies. Today they are sitting on billions in cash.
Please rtf the original article. The deal with 5 different manufacturers is why Apple will find it difficult to source the supply in 2013. They schemed the manufacturers and always projected they needed way more than they purchased. This lead to oversupply in the market and lower prices. So the 5 year, 5 manufacturer deal fell off the cliff. Therefore Apple in 2013 will have to put up billions as opposed to 1.25 billion and they probably have to buy all of the nand they think they need. Not just project and then play one manufacturer against another. Therefore Apple will possibly pre-pay and possibly pre-pay much higher prices and will also need to buy it. They will probably not make as much money on the NAND but still a significant margin.
And the parent post is modded informative! The best of slashdot. This post needs to be modded down into negative territory.
Back in 2005 Apple pre-paid $1.25 billion to five NAND flash memory suppliers to ensure they would be able to supply Apple with memory through 2010. That was a five-year supply agreement (see Apple to pre-pay $1.25 billion for flash memory) that made sure Apple could continue its apparently inexorable rise as a mobile consumer electronics supplier. The five NAND flash memory suppliers were the same as those listed above although how the pre-payment broke down was not revealed at the time.
Apple also then proceeded to give its suppliers an indication of its estimated future needs year-by-year so that the vendors could tailor their manufacturing to meet its needs. The only problem was that towards the end of the five-year agreement Apple was reportedly accused of always over-estimating the need causing the flash memory vendors to be always in an oversupply situation and unable to raise prices. These accusations circulated in South Korea during 2009 (see Apple accused of NAND price manipulation).
A fab isn't just some generic piece of equipment, and getting beyond 32nm has proven difficult for most companies. If it were so easy, then AMD would have 22nm processors currently and wouldn't be having nearly as many problems competing in the CPU space. There is also expertise that is required beyond the basic equipment.
6 years ago Samsung was barely a competitor in the non-smartphone market, now Samsung is outselling Apple in smartphones.
Samsung is probably their own biggest customers for their NAND flash. Companies often "buy" within their own divisions, so Samsung's phone division is Samsung's component division's best customer.
Now also consider that Samsung has become the largest manufacture for smart TV's and AV components, all requiring NAND flash, even some of their refrigerators have web services built into them. Samsung is creating an empire significantly larger than Apple.
ANY Samsung shareholder should be thrilled with the direction Samsung has taken and turning it into a household name that exceeds Apple's mindshare around the world.
You could be a stupid investor and dump Samsung shares because you don't like how they are treating Apple, but realize Apple is becoming a small drop in Samsung's profits and business strategy. Considering how vocal Apple has been about moving away from Samsung, Samsung is taking the right steps to sever ties and move towards more lucrative and profitable industries, namely, themselves.
Samsung makes phones, tablets, computers, the parts that goes into those devices AND TV's, appliances, and so much more. Samsung is so friggen diversified that Apple probably NEVER made a significant impact on their profits, so if I ran Samsung, I would say good riddance and cripple one of their pissy competitors in only one of their many many divisions.
I haven't thought of anything clever to put here, but then again most of you haven't either.
OH YEAH?!! Well, your favorite brand of pencil sucks. They don't even use sustainably-grown cedar!
the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
The article starts by saying there's little to no reliable evidence for this... but Apple MAY be planning to jump ship on Samsung with regards to manufacturing of its A7 processor. Then, from there it goes on to "if this happens, how will it affect Samsung's willingness to sell memory to Apple", and speculates (with zero support, not even rumors) that maybe Samsung MIGHT need to keep more of its own memory for its own products, in which case it MIGHT have to allocate how much memory Apple can buy (again, this is not even supported by some whisper the author heard in a bar - he's flying solo).
That's bad rumor-mongering even by analyst standards.
#DeleteChrome
No, its not probably the start of the term; it goes back, in that specific form, at least to IBM's tactics against competitors in the 1970s.
If flash gets tight, Adnroid tablet makers don't have many qualms about reducing internal flash and externalizing storage costs via (micro-)SD cards. As it is, a lot of those tablets might already be using lower capacity/spec flash that Apple wouldn't touch if it was free...
Log in or piss off.
The reason Apple's iPhone/iPad sales were up last quarter but their profit remained flat is because they were losing more money on the supply chain.
So I wouldn't assume it wont hurt them, it already did on other components (screens), it likely will on flash too. It may well mean that not only will profits be flat again with an increase in sales, but might actually decline despite shifting more units.
Effectively much of Apple's profits have been gained because they had great deals on components, they don't have those deals any more, and their suppliers like Samsung are sick of their lawsuit antics and in close competition now so are unlikely to sign such sweet deals again either. You're right that they could raise prices but that will have an impact on sales - maybe not to fans, but certainly to the average Joe who also buys the iPhone normally.
Effectively they're in a quandary, because costs of production has gone up as fast as rate of sales causing flat profits, if they raise prices then they'll lose even the continued increase in rate of sales, if they don't, then profit might actually go down. The only way they can deal with it is to make more profit elsewhere (i.e. a new product line), or somehow more drastically increase rate of iThing sales to outpace the growth in component cost.
In reality they'll probably attempt both, the success of which will no doubt play out in front of our eyes in the next year dependent on whether the iWatch and iTV turn up, or the iPhone 6 and iPad 5 can steal a serious share of the market back off of Android. They certainly can't rely on cheap component deals though - I suspect even Foxconn will be reaching a point where it realises it's got Apple by the balls in terms of manufacture given that perhaps no one else can churn out the levels Apple needs to meet demand and may start upping it's prices somewhat too.
This only become a better situation for memory manufacturers with iPhone and iPod with demand for 16 and 32 GB memory sizes. Who else was buying at that size? Even the Zune never got more solid state storage than 16GB. And look a the iPad, now pushing 128 GB, while the WIndows Surface RT was released with 16GB and 32GB. The point is that if the manufacturers wanted to sell memory, Apple was the firm that was mass marketing large quantities to consumers.
What really changed in 2010 was Android, and the smartphone market share approaching 10%. It is interesting to note at that time RIM still had the largest market share, and would grow in revenue for another year. It is also interesting that most phones only has 1GB or none at all. Android phones, OTOH, like iPhone, built a demand of lots of memory. The smartphone was going to grow, and it was going to require lots of nand flash. Apple, for the first time had real competition for memory.
Here is where the manufacturers have to be careful. While tablets are going to drive memory demand, phones may not. I bought the 64(57available)GB iPhone and now realize that there is no way I am going to use all of it. With permanent cloud storage for purchased content and streaming I do not need it. An android phone I bought last year had almost no storage. It does not need it. All content is streamed. So right now we are in a bubble. People still want memory, but how long are they going to pay for memory they do not need? And if other do what MS is doing, which is selling tablet with insufficient memory, how is that going to effect the market?
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
If you have Apple's pile of cash, getting a fab is pretty damn easy. You just hire people who know exactly what they are doing. If you scramble, you can have blueprints and permits done in a month, all the POs and contracts can be signed by next month, and you can break the ground and go ahead. All it takes is focused people who know exactly what it takes in their discipline -- architects, process engineers, building site managers, etc.
A successful API design takes a mixture of software design and pedagogy.
That may be one of the funniest things I've read in a while.
Next time I need a baby in two weeks, I'm going to get together a team of 18 women and have them knock it out. I can pay extra, so it shouldn't be problem to get them focused and working together.
Is it just my observation, or are there way too many stupid people in the world?
It took SAMSUNG 2 years to build a fab in China recently. That was considered neck-breaking speed to have one built. China is the easiest place to build b/c of poor labor and environmental laws, but you can't simply clear land, pour concrete, complete a building, and get the equipment online much faster. Even if you purchased an old fab, it would take at least a year or two b/c the old equipment wouldn't be of the quality necessary -- nor would the air filtration, etc. It'd take you almost as long to re-furb an old fab as it would to build a new one to get it to where you'd want it to be.
All companies that build fabs have the kind of money to make these things happen. Pouring more into it won't make it happen any faster as speed is always a priority in the industry. You build a fab, expect to get so many years out of it of high profit, then switch gears to low profit as you build another fab for the higher profit things... and then re-tool the old fab or sell it when the cycle starts over.
Gah, Slashdot needs a better way to log in so I don't have to post as AC w/ out wiping what I just wrote and finding the post to reply to... oh well.
If you have Apple's pile of cash, getting a fab is pretty damn easy. You just hire people who know exactly what they are doing. If you scramble, you can have blueprints and permits done in a month, all the POs and contracts can be signed by next month, and you can break the ground and go ahead. All it takes is focused people who know exactly what it takes in their discipline -- architects, process engineers, building site managers, etc.
Seriously?? LOL...
I used to work for a company that builds the robots/machines required for fabs. It would take 6 to 12 months just to spin up extra capacity in an existing fab. Most fabs took at least 2 years to build, from planning to production. In addition, it then takes another year or so to improve chip yields to get the plant at maximum efficiency. And this is working with major chip manufacturers with experienced personnel already on their payroll and with huge budgets. For Apple to build a fab, it would take them much longer as they would be literally starting from scratch with hiring fab managers, etc.