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Apple to spend $1.25bn to secure Flash supply

Five vendors to ship it chips until 2010

Apple has come clean on the much-rumoured but until today officially unconfirmed Flash memory supply deals it's banking on to continue pumping out iPod Nanos and Shuffles.

The company also revealed it has sold more than 30m iPods since the player launched in November 2001. iTunes has sold more than 600m downloads.

The Mac maker today announced it has signed "long-term supply agreements" with not only Hynix and Samsung - the two NAND Flash produces most closely connected with Apple - but also Intel, Micron and Toshiba.

All five chip makers will supply Apple with Flash through to the end of 2010. It is together paying them $1.25bn in advance, with the pre-payment commencing during the next three months, it said.

Apple was rumoured to have struck a big supply deal with Samsung in September, when the Nano was launched. However, folk who took their new Flash-based players to bits found them equipped with Toshiba Flash as well as Samsung chips.

More recently, Apple was reported to be seeking low-capacity Flash chips for the Shuffle - which is expected to be redesigned and relaunched early next year. Hynix was one of the companies Apple was said to have approached for a quote.

Apple has done this kind of thing before. In 1999 it punted $100m Samsung's way to ensure adequate quantities of LCD panels for notebook computers at a time when supply was starting to look tight. Other companies have done the same.

With phone makers turning to NAND Flash, not to mention all the other MP3-player makers who need the stuff, demand for the chips is at a premium, and Apple is using its fiscal clout to ensure enough of them come its way. ®

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