Flash Memory Order Signals 32-GB Apple iPhone

DigiTimes reported Apple's massive purchase on Thursday, citing unnamed downstream suppliers. The DigiTimes report follows a Think Equity Partners report released in February that indicated Apple nearly cleaned out Samsung's flash memory supply and also tapped Toshiba and Hynix to deliver more flash memory chips.

These reports raise the questions: Why would Apple put in such a large memory order and what will it use the 8-Gb NAND flash chips for?

The chips are typically used to build 16-GB, 32-GB and 64-GB devices. A purchase of that magnitude further fuels rumors that Apple is building a bigger-memory iPhone, likely with 32 GB of storage, to complement the 8-GB and 16-GB iPhone 3G models already available.

Rumors of a new, bulked-up iPhone have been circulating for the past several months. Many industry watchers expect some form of new Apple iPhone hardware to be announced as early as Apple's Worldwide Developers Conference (WWDC) in June. A new iPhone is among many expected announcements at WWDC.

Another catalyst for new iPhone speculation is the unveiling last month of iPhone OS 3.0 software, which will add new features such as copy and paste, peer-to-peer networking and new business models for applications.

Along with the software update, the new iPhone also is expected to add video-recording capabilities and a higher resolution camera, 3.2 megapixels. Those new features will be memory intensive and require Apple to build a more storage-heavy device.

According to Apple news blog Apple Insider, an order of that magnitude could theoretically be used to produce 6.25 million 16-GB iPhones or 12.5 million 8-GB iPhones.

While Apple is said to have ordered 100 million of the 8-Gb chips, it is still unclear whether Apple bought finalized chip packages or bare memory chips that will be stacked for higher density.

A third-generation iPhone is expected to hit sometime this summer, which would fall in line with Apple's typical iPhone release schedule that saw the original iPhone debut in June 2007 and the iPhone 3G hit in July 2008. A 32-GB model would make sense, as sales of the 8-GB and 16-GB models have trailed off. The dip in sales has prompted the sale of refurbished and discounted iPhones and has also led carriers, such as AT&T, to offer the iPhone 3G without a service contract.

Last month, Lazard Capital Markets released a report indicating that Apple will begin production on a 32-GB iPhone 3G in April and May, perfect timing for the bulk flash memory order and a June announcement.