Apple expects to purchase up to 40% of the NAND flash chips produced by Samsung, according to the market research company iSuppli Corp. An article at EE Times reports: "As Apple moves from a hard disk-based iPod to a flash-based iPod Mini player at the 4-GByte capacity, the switch could leave other NAND customers scrambling for supply, the market research company said."

iSuppli analyst Nam Hyung Kim noted in his report that "Samsung has offered Apple 'extremely low prices on its NAND parts' in order to convince Apple to switch from HDD storage to NAND memory for the 4-GByte-density iPod." He based his report on interviews with sources told him the information, although the article doesn't note if they were anonymous.

Despite the fact that 4GB flash memory is much more expensive than 4GB micro hard drives, reporter David Lammers writes: "Samsung would still reap profits, even at aggressive pricing levels, Kim said, adding that 'sewing up the marquee iPod memory business is well worth the reduction in margins' for Samsung."

If Apple does switch the 4GB iPod mini to flash storage, the company could wind up purchasing 190 million to 280 million "additional 256-Mbit-equivalent density NAND parts, representing between 11 and 22 percent of worldwide NAND flash output," according to Mr. Lammers.

He says that the report concludes: "Companies making MP3 players in Asia, vendors of USB flash drives, and other consumers of NAND flash, would be well advised to forge stable supply relationships for NAND flash going forward, rather than relying on the spot market."