Samsung seals big SSD chip deal with Apple

By Kim Yoo-chul

Samsung Electronics struck another major chip deal with Apple with an estimated monetary value of "billions of dollars," helping Samsung further strengthen its chip business.

The latest agreement is calling for Samsung Electronics to sell its latest solid state drive (SSD) storage devices using its V-NAND technology to Apple's new range of ultra-slim and high-end notebook models in 2016, two people directly involved with the deal told The Korea Times, Friday.

"Samsung Electronics recently agreed with Apple to provide SSDs using its latest three-dimensional (3D) V-NAND tech. The deal is estimated to be worth a “few billion dollars,” said one of the people.

Samsung's chip factory in Xian, China, will handle the production.

While Samsung will start providing Apple with entire chunks of the requested SSD products, the shipment volume, however, is subject to change according to situations, he said.

The deal is the third of its kind and Samsung will be responsible for at least half of the production of mobile DRAM chips to be used in upcoming iPhones.

Apple has also enlisted Samsung to handle 80 percent of the production of the A9 chipset to power new iPhones, pushing Taiwan's TSMC back to the secondary position in the highly profitable mobile application chip business.

"Samsung's SSD products with 3D V-NAND technology offer a significant performance boost in performance and endurance as compared to its predecessors, making them ideal for use in high-end notebooks. Samsung is the only company to mass produce the products currently," said the other people.

Unlike DRAM chips, SSD is based on NAND flash technology. The 3D NAND is an upgraded NAND flash technology. NAND chips are used to store data inside all digital devices from smartphones to TVs, even after the products are switched off.

Samsung Electronics’ spokesman in Seoul declined to confirm the agreement as it doesn't comment on client-related issues.

Conventional hard disk drives (HDD) are rapidly being replaced by SSD as Samsung, which is the world's top memory supplier, is heavily promoting the sale of SSD products.

"Client SSD attach rates in notebooks, including ultrabooks, were up significantly last year and we see further growth ahead. We expect hybrid HDDs and SSDs to capture an increasing share of storage units in PCs," said Bernstein Research's senior analyst Mark C. Newman in a recent report.

The people said Samsung's 3D-NAND SSD storage technology makes it more suitable for general consumer application in key devices such as notebooks and gaming PCs.

The agreement comes a few days after Samsung Electronics' memory chip division head Kim Ki-nam told local reporters that the first quarter will also be good in terms of profits.

Its chip business reported 2.7 trillion won in operating profit during the last fourth quarter of 2014, accounting for 51 percent out of total operating profit that Samsung Electronics earned.

Samsung's logic-chip business, which manages processors, has returned to the black since early this month. Analysts say the division will report about 1 trillion won operating profit this year, while the company's memory chip business is expected to get more than 12 trillion won in profits, helping the semiconductor division see a record in annual profits.