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Samsung Electronics, one of the world’s largest semiconductor manufacturers, has according to Digitimes informed downstream customers it will start reducing its supply of NAND flash chips to them from July as its key customer Apple (NASDAQ:AAPL), has placed a large batch of orders (the order is said to be for 50-million “8Gb-equivalent”) that should cover all iPod and iPhone models for the second half of the year.

This order follows a June procurement for 25 million of the same chips.

This latest report reflects an increasing shift towards the use of flash in Apple’s portable devices, including the iPhone.

Samsung Electronics, one of the world’s largest semiconductor manufacturers, according to Digitimes, has informed downstream customers - it will start reducing its supply of NAND flash chips to them from July as its key customer Apple, has placed a large batch of orders (the order is said to be for 50-million “8Gb-equivalent”) that should cover all iPod and iPhone models for the second half of the year.

This order follows a June procurement for 25 million of the same chips.

This latest report reflects an increasing shift towards the use of flash in Apple’s portable devices, including the iPhone.

Samsung has also been readying 8GB flash chips that should allow larger-capacity players within the same timeframe as the claimed supply spike.

In addition to the Apple orders, supply will also be reduced because of a capacity adjustment Samsung made in May. The chip maker allotted less capacity for NAND flash production during April and May in attempts to reduce oversupply, which should be reflected in actual output in July, the sources said.

2008 hasn’t been exactly a banner year for NAND manufacturers. As of mid June, the spot price for 8Gb of NAND flash fell to just $2.32. NAND prices tend to drop quickly—8Gb of MLC NAND flash was $8.25 on June 15, 2007, and $3.14 in January.

Despite an apparent sharp drop in NAND flash, the sources said industry players are still doubtful about the impact from the Apple orders. They noted that Apple already landed a batch of 25 million 8Gb-equivalent NAND flash chips from Samsung in June and commented that ongoing procurement will depend largely on iPhone sales.

Samsung has also been readying 8GB flash chips that should allow larger-capacity players within the same timeframe as the claimed supply spike.

In addition to the Apple orders, supply will also be reduced because of a capacity adjustment Samsung made in May. The chip maker allotted less capacity for NAND flash production during April and May in attempts to reduce oversupply, which should be reflected in actual output in July, the sources said.

2008 hasn’t been exactly a banner year for NAND manufacturers. As of mid June, the spot price for 8Gb of NAND flash fell to just $2.32. NAND prices tend to drop quickly—8Gb of MLC NAND flash was $8.25 on June 15, 2007, and $3.14 in January.

Despite an apparent sharp drop in NAND flash, the sources said industry players are still doubtful about the impact from the Apple orders. They noted that Apple already landed a batch of 25 million 8Gb-equivalent NAND flash chips from Samsung in June and commented that ongoing procurement will depend largely on iPhone sales.

Source: Apple, On Huge Order, Breaks NAND Flash Supply