Apple Computer recently announced a long-term supply agreement with four large makers of flash memory under which the latter would supply Apple flash memory, which is used in the company’s digital music players, by the year 2010. Days after Apple unveiled the deal, some analysts expressed believes that the company cannot meet the demand for the iPod devices.
“We want to be able to produce as many of our wildly popular iPods as the market demands,” said Steve Jobs, Apple’s chief executive.
The long-term supply agreements were reached with such companies as Hynix Semiconductor, Intel Corp., Micron, Samsung Electronics and Toshiba. The manufacturers will supply necessary amount of NAND flash memory through 2010. As part of these agreements, Apple intends to prepay a total of $1.25 billion for flash memory components during the next three months.
Given that the main product line that utilizes flash memory is Apple’s iPod family, the agreement means that the company has solid plans to build and, possibly, expand this lineup going forward. However, signing a long-term contract may mean that the company wants to make sure it will meet the demand, which, some analysts say, is lower than is typically thought.
“Based on limited iPod availability (during times of peak demand) outside of Apple retail stores and apple.com, we continue to believe that some Street estimates for iPod unit shipments for the December quarter are too high,” said Gene Munster, an analyst with research firm PiperJaffray, reports AppleInsider web-site.
“We are currently modeling for total iPod shipments of 9 million. While we do believe slight upside to our estimate is achievable, we do not expect Apple will be able to ship the number of units that are already anticipated in some Street models,” Mr.