Apple orders 50 million iPhone NAND chips from Samsung, rest of world put on hold?

Daaaamn, talk about clout. If DigiTimes' sources are correct, then Samsung, the world's primary supplier of flash memory, just told its non-Apple customers to suck it in favor of a "large batch of orders" it received from Cupertino. The order is said to be for 50-million "8Gb-equivalent" (we assume they mean gigabyte, or GB) NAND chips "mainly for use in Apple's iPhone." This order follows a June procurement for 25 million of the same chips. In response, Samsung has reportedly told its lesser customers that it would "sharply cut supply" of NAND to them while the order is being fulfilled. The shortage is compounded by Samsung lowering its manufacturing output in April and May in an attempt to reduce oversupply. Still, if these numbers are true (they seem high and DigiTimes can be hit or miss with its Apple sources) then the world is about to be awash in iPhone 3Gs come July 11th.

Update: We've given the Gigabits vs. Gigabytes a bit more thought. If it's 50 million 8Gbit chips as stated, they would divide evenly across about 2.1 million 8GB iPhone 3Gs plus another 2.1 million 16GB models. A reasonable production run for Apple's global launch but an order which shouldn't be so taxing on Samsung's production capability. Something doesn't add up.

[lu1de @ Jul 2nd 2008 6:51AM]

cool

[fred @ Jul 2nd 2008 7:11AM]

There is nothing cool about this at all. This could easily lead to delayed production of other devices, which could lead to higher prices down the road for consumers.

I think that Samsungs customers should thank the company for its obvious commitment to them by cultivating other sources of NAND chips. Besides it's just stupid to have it all come from one place anyway.

[John @ Jul 2nd 2008 9:34AM]

I'll translate for fred: Baaaaaaaaaaaawwwwwwwwww!!!!!

[fred @ Jul 2nd 2008 10:25AM]

"Baaaaaaaaaaaawwwwwwwwww!!!!!"

Wha?

[TL @ Jul 2nd 2008 10:45AM]

Hehe, ya, the Samsung Instinct already sold out... i bet by the time they re-vamp up producion, apple will be looking up with their pants down... http://www.pmptoday.com/2008/07/01/sprint-instinct-sells-out-historic-ev-do-phone/

[wizzle @ Jul 3rd 2008 2:49PM]

sorry to burst your anti-apple bubble, but walt mossberg already put the kibosh on the instinct. it sucks.

[Dubbinator @ Jul 3rd 2008 12:48AM]

Walt Mossberg? Are you f'n kidding me? Wait, let me try something:

Did you hear? Sprint says the Instinct is better than the iPhone...

I will be one of the first to say the iPhone is a much better phone than the Instinct or the Dare, but don't be a moron and refer to a bias article by one of the biggest Apple fanboys in order to make the iPhone look superior.

[wizzle @ Jul 3rd 2008 2:58PM]

@Dubbinator

clearly, you are not in touch with reality. mossberg is largely considered to be one of the most unbiased tech reviewers for one of the most unbiased publications in the world.

however, you missed my point, so even if you disagree, it's not really up for argument whether he has more influence than anyone on the market - ergo, his bad review will kill the instinct. which is all i was saying.

and i think you've confused david pouge with walt mossberg anyway.

[cbisquit @ Jul 2nd 2008 6:54AM]

Monopsony power. Learn it.

[DT @ Jul 2nd 2008 7:12AM]

There are other suppliers of NAND, you know.

[thef1re @ Jul 2nd 2008 6:57AM]

really? what eles did you think was in the iphone? SD memory?

[cy21 @ Jul 2nd 2008 6:58AM]

just a coup[le of days left
hurray

[Magnificen7 @ Jul 2nd 2008 7:07AM]

You also have to remember, 16 GB iPhones use two 8 GB chips, and I am assuming more 16 GB phones will be made than the 8 GB. This brings this 'staggering number' closer to a sane number.

[Ben @ Jul 2nd 2008 8:36AM]

This is VERY true...however I think that more people will be seeking the 8GB iPhone.

[connorcam @ Jul 2nd 2008 8:39AM]

No it doesn't, the reason the iPod Touch's capacity is double the iPhone's is that it uses two chips, e.g. the 32GB uses two 16GB chips.

The iPhone can only physically take one chip at a time.

[Zak @ Jul 2nd 2008 11:38AM]

Magnificen7 is wrong, connorcam is right. There is only room for one chip in the iPhone, and there's room for two chips in the Touch. That's why the Touch is available with 32 GB and the iPhone isn't.

[CraigJ @ Jul 2nd 2008 12:30PM]

Zak, I believe you are right, but that was for the v1 iPhone. Are we sure that v2 only has room for 1 chip?

[01 @ Jul 2nd 2008 4:03PM]

I thin they're also forgetting about the iPod Touches...won't those be using the same storage method as the iPhone?

[Hellios @ Jul 2nd 2008 7:07AM]

This seems like a great opportunity for SanDisk and similar companies to sign new contracts, and that makes me happy since Samsung was getting too big for it's own good.

[Girish @ Jul 2nd 2008 9:40AM]

God damn lazy-good-for-nothing people like you.
What the hell do you mean "Samsung was getting too big for it's own good".
It is because of Samsung's size and capability that you are able to enjoy cool gadgets like iPhone, and all the other stuff out there. If Samsung wasn't as big as it is now you will not be getting LCD TVs, portable players and smart phones at the current prices it would have been atleast double due to shortage of basic technologies.

I know Samsung, It won't keep other customers waiting for long. Their nand manufacturing is uber-cool and can cater to the market very easily.

[James Bowe @ Jul 2nd 2008 9:51AM]

chill out Girish, I fail to see how the desire for competition makes the dude lazy. competition in the marketplace is good for consumers. period. if you don't get that, you obviously dropped econ 101 after sleeping through the first class. if samsung drops supply, and other suppliers can step up their game and fill in the gaps, this leads to stiffer market competition, and lower prices. plus a boatload of iPhones. if only AT&T wasn't asking us to bend over with those monthly plans....

[adrian @ Jul 2nd 2008 6:15PM]

Business is Business, Samsung would be foolish to turn down such a big order, Apple or not. It's one of the reasons why Samsung is so big today.

[DT @ Jul 2nd 2008 7:13AM]

Plus, I'm sure that a lot of these will end up in the Touch as well. Not sure what NAND the nano uses, but it may end up in there, too.

[Arran @ Jul 2nd 2008 7:24AM]

Impact the price of other flash devices ?

[Maestro @ Jul 2nd 2008 7:36AM]

Don't they use the same memory in the iPod Touch?

[Maeztro @ Jul 2nd 2008 7:38AM]

Don't they use the same memory in iPod Touch?

[Steffen Jobbs @ Jul 2nd 2008 7:42AM]

After the iPhone, the rest of the handset world doesn't matter. Supply the best, forget the rest.

It wouldn't make much sense for Samsung to concern themselves with supplying chips to some companies that are only going to sell a few thousand smartphones. Maybe Apple should buy out Samsung and cut off all of Samsung's supply of NAND to other handset companies. I'm suspecting that would probably be illegal.

[omnicloud @ Jul 2nd 2008 8:12AM]

Err... Apple buying Samsung? They rake in US$90.2 billion in revenue and have US$267.4 billion in assets. And that's Samsung Electronics, there are a TON more Samsung businesses AAPL on the other hand brings in US$24.01b.

[Daza @ Jul 2nd 2008 8:20AM]

I think you GREATLY underestimate the size of Samsung. Samsung and their subsidiaries generate 25% of South Korea's GDP alone. Apple are small fish compared to what Samsung do. They are much, much more than a couple of LCD TVs and a mobile phone.

[Ben @ Jul 2nd 2008 9:06AM]

Yeah? Then what else are they?

[zackangelo @ Jul 3rd 2008 12:39AM]

Well, at one point they built the world's tallest building, for example.

http://en.wikipedia.org/wiki/Samsung_Engineering_&_Construction

[Harkonian @ Jul 2nd 2008 1:15PM]

@Daza I think you SLIGHTLY overestimate Samsung's size. They generate 20% of South Korea's GDP, not 25%. [source: http://www.economist.com/displaystory.cfm?story_id=10225944]

[Brandon @ Jul 2nd 2008 3:35PM]

http://en.wikipedia.org/wiki/Samsung_Group
They're the second largest conglomerate in the world. (first is GE)

[Steven @ Jul 3rd 2008 5:10AM]

@Harkonian:
Don't get technical! In a discussion like this 20% and 25% is exactly the same.

[Steven @ Jul 3rd 2008 7:02AM]

"Well, at one point they built the world's tallest building, for example."

And my washing machine!

[Ian @ Jul 2nd 2008 7:43AM]

So Samsung is going to have these NAND chips put into a product that millions of people want? I don't see this as a huge problem. Current Apple products probably use a large proportion of NAND chips anyway. It's all about demand, and I'm not very surprised. If the choice was to give Apple only a fraction, say 50%, of Samsung's manufacturing output, then there'd be a huge shortage of iPods Touches, Nanos, and iPhones, while Samsung's other customers may not be in short supply at all due to there being less demand. Who knows.

[Phil @ Jul 2nd 2008 7:44AM]

First....it could be all of the above: Using the Chips for a number of devices.
But secondly, the big order could really be a strategy of Apple (some know they are back-stabbers) to cut down supply to other "iphone-similar" products making their products the only to be available in great numbers.
Thirdly, anyone knowing the rule of thumb: Demand regulates price, concludes that this big order will make NAND as cheap as never but Apple will most probably not pass it down to the customers/us (did I mention the back-stabbing theory? *wink*)

[neofolklore @ Jul 2nd 2008 7:51AM]

price tag?

[Nastro @ Jul 2nd 2008 7:54AM]

It doesnt mean 50 million iPhones, just means that those 50 mil chips will be spread across all products from the 8gig nano to the 32gig itouch.

[ElvisLIves @ Jul 2nd 2008 8:01AM]

Flash manufacturers use terms of gigabit, not gigabyte. The original article islikely correct.

"we assume they mean gigabyte, or GB"

[Daza @ Jul 2nd 2008 8:22AM]

What use would Apple have for 1GB NAND chips, except for perhaps the iPod shuffle and *maybe* the iPod nano 4GB?

I know these companies prefer to use bits instead of bytes, but 50 million 1GB chips does not make a lot of sense.

[Thomas Ricker @ Jul 2nd 2008 8:24AM]

It's possible that DigiTimes is using the term correctly. However, Apple has historically placed orders of 500 Million 4Gbit NAND chips at a time without the equivalent downstream impact on other Sammy customers. So an order of 50m 8Gbit chips shouldn't be such a big deal.

http://www.eetasia.com/register/login.php?type=ART&jumpvalue=8800463231&DD=&refilljp=L0FSVF84ODAwNDYzMjMxXzQ5OTQ4Nl8zZDZlYjQyNTIwMDcwNV9uby5IVE09&cat_id=499486

Having said that, if it's 50m 8Gbit chips then that divides evenly across about 2.1 million 8GB and 2.1 million 16GB iPhone 3Gs which is reasonable.

Thomas

[Ethan @ Jul 2nd 2008 8:03AM]

So they cut supply? Wonderful.

[Ethan @ Jul 2nd 2008 8:03AM]

So they cut supply? Wonderful.

[Ethan @ Jul 2nd 2008 8:24AM]

I didn't refresh or anything. Wonderful.

[BFish @ Jul 2nd 2008 8:07AM]

Looks that those non-Apple manufactures can add +2 months to their launch schedules since Jobso is taking all the flashes. Will affect phones like Nokia N96 etc.

[David Hamby @ Jul 2nd 2008 8:15AM]

8Gb is 8 Gigabits and you'll need 8 of them to make one 8GB iPhone. So take your total and divide it by 8 and see of that doesn't make more sense.

[kaiz3n @ Jul 2nd 2008 8:14AM]

Good I would like to walk into an AT&T store and get one, not camp out the night before.

[Sirius @ Jul 2nd 2008 8:20AM]

talk about reducing oversupply... they sure accomplished that...

[OfflinePK @ Jul 2nd 2008 8:44AM]

Talk about aiming high