Wednesday, February 22, 2006, 09:00 am PT (12:00 pm ET)
Did Apple overbook its NAND flash inventory?Several large buyers, including Apple Computer, may have overbooked on NAND flash memory during the fourth quarter of last year, causing a NAND flash memory glut in early 2006, according to iSuppli Corp.
Slower seasonal demand, combined with overbooking and inventory adjustments, has caused the NAND flash memory market to enter a temporary lull, the research firm said on Wednesday. "In the first quarter, sales have decelerated for key consumer-electronics products that incorporate NAND flash, such as Apple Computer Inc.s iPod music player."
While such slowdowns are typical in the first quarter following the holiday season, iSuppli believes this phenomenon is leading to an acute oversupply situation in the NAND market in early 2006.
Furthermore, the firm said that Apple and many other major buyers overbooked NAND flash during the fourth quarter of last year due to concerns over short supplies. "This led to swelling inventories of NAND parts," iSuppli said. Buyers are now reported to be reducing their inventories to deal with slower sales, causing NAND availability to rise and prices to fall.
"iSuppli expected that the NAND market would enter a state of oversupply in the first quarter," said Nam Hyung Kim, director and principal analyst with iSuppli. "Therefore, we dont believe that the current glut represents a fundamental, long-term worsening in market conditions."
In contrast to NAND, the DRAM market is experiencing improved conditions and has been in a state of recovery since January, iSuppli said. The firm reports that DRAM suppliers have been successful in raising OEM contract prices during the first half of this month and are expected to increase prices again in the second half.
This past November, Apple announced that it had reached long-term supply agreements with Hynix, Intel, Micron, Samsung Electronics and Toshiba to secure the supply of NAND flash memory through 2010. As part of these agreements, Apple prepaid a total of $1.25 billion for flash memory components in the three months that followed — $250 million to each corporation.
On Topic: General
- Apple activates in-house content delivery network, begins migrating content downloads - report
- Samsung earnings disappoint as company blames competition in smartphone space
- Apple said to cut some 200 jobs from Beats as acquisition closing date looms
- Apple order fulfillment ranks first among online retailers with average delivery time of 2.3 days in June
- Xiaomi's Redmi Note allegedly sending user data to China surreptitiously