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Apple prepays for a half-billion dollars in flash memory


Apple has continued its significant investment in flash memory, with the Cupertino company announcing Tuesday that it recently prepaid $500 million to Toshiba to secure long-term supply of NAND for its mobile devices.

The half-billion dollar investment came early on in the September quarter, so it was not officially revealed in Tuesday's Q3 results. However, Apple COO Tim Cook and CFO Peter Oppenheimer discussed the purchase during the earnings conference call.

"We view flash as a very key component for us," Cook said, "because as you know we use it so many of our products."

As Cook pointed out during Tuesday's conference call, Apple products make up a significant portion of the flash memory devices on the market today, including the iPhone, iPod touch, iPod nano and iPod shuffle.

In 2005, Apple paid $1.25 billion in advance to Hynix, Intel, Micron, Samsung Electronics and Toshiba to secure the supply of NAND flash memory. The previous long-term supply agreement runs through 2010.

Details were not made available on Tuesday's conference call as to the terms of the new agreement with Toshiba.

During the earnings call, Cook was asked whether the company would do any other long-term deals with suppliers. The COO said there are currently no plans on the table, but that he wouldn't "close that door."

"We are always open to doing additional deals," he said, "with the right terms and conditions."