Apple Sews Up iPod Memory Supply

Apple signs long-term deals with iPod flash memory providers Hynix, Intel, Micron, Samsung and Toshiba to keep its pipeline loaded until 2010. As part of the announcement, Apple said it will hand out $1.25 billion in advance payments for memory components

Apple Computer Inc. announced Monday that it signed new deals with the companies supplying flash memory components for its popular iPod digital music players ahead of the holiday buying season.

The Cupertino, Calif., manufacturer said that it inked long-term contracts with partners Hynix Semiconductor Inc., Intel Corp., Micron Technology Inc., Samsung Electronics Co. and Toshiba Semiconductor Co. to supply NAND flash memory for the devices through 2010.

Under the individual deals, Apple reported that it will prepay memory chip makers $1.25 billion over the next three months to help increase its component supplies.

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Apple executives framed the initiative as an effort to keep enough iPod memory on hand to keep up with orders for the devices during the last six weeks of the calendar year, typically the heaviest sales period for electronics makers, and well beyond. Chief Executive Steve Jobs said that based on the increased flash memory supplies, Apple hopes to produce "as many iPods as the market demands."

While Apple has not reported just how many iPods it has sold in 2005, the move to shore up its flash memory supply is likely aimed at eliminating the problems it has had keeping the devices on retailers shelves. In October, Apple Chief Operating Officer Tim Cook said on a conference call with analysts that component-related "supply constraints" were preventing the manufacturer from shipping larger numbers of iPods, and company executives have hinted in the past that a limited inventory of flash memory was one of the culprits in constraining production.

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