Apple said Tuesday that it has made a $500 million prepayment to Toshiba for flash memory chips and indicated the market is stabilizing.
Apple COO Tim Cook says the flash memory market is stabilizing.
(Credit: Apple)"The NAND flash market has now begun to stabilize and we expect it to move to a slight demand imbalance," said Apple Chief Operating Officer Tim Cook in Apple's Tuesday earnings conference call. (The call is available as an audio Webcast on Apple's Web site.) The news was reported earlier by Reuters.
"In terms of the Toshiba prebuy, we did a long-term supply agreement with Toshiba, as a part of that, as a part of the terms and conditions, we paid them $500 million," Cook said. "We view flash as a very key component for us because we use it in so many of our products and also we're a reasonable percentage of users of flash on a worldwide basis."
NAND flash is used for data storage in a variety of consumer products including digital media players and smartphones, such as the iPod and iPhone, respectively. For the last two years, flash chipmakers such as Japan-based Toshiba and U.S.-based Micron Technology have been reeling from severely depressed flash memory pricing.
Intel, which makes flash chips jointly with Micron, is also seeing a recovery in pricing. "For the year, it's up over 50 percent," said Troy Winslow, marketing manager for the NAND Products Group at Intel, in a phone interview earlier this week. He was speaking about the recovery in flash memory chip prices in the spot market. "That's been very positive for the industry and obviously we have benefited from that. And our business is going very well," he said.
Even with the better spot market pricing for flash memory--which is a boon for manufacturers--this won't necessarily translate into a jump in prices for consumers, according to Avi Cohen, managing partner at Avian Securities. "If the question is--will components (flash chips) cost 50 percent more than they did three months ago? Absolutely not," he said.
The iPhone, of course, is more than the sum of its parts, but the cost of individual components adds up--to $178.96, to be exact.
A new analysis by iSuppli details the cost of the iPhone 3GS and the motley collection of chips inside.
The entry-level (16GB) version of the iPhone 3GS carries a BOM (bill of materials) cost of $172.46 and a manufacturing expense of $6.50, for a total of $178.96, said Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli, in a statement.
Apple iPhone 3GS major components and cost drivers
(Credit: iSuppli)Service providers are paying more for the low-end iPhone 3G S than the original iPhone 3G, according to Rassweiler. "Although the retail price of the 16GB iPhone 3GS is $199, the same as for the 8GB version of the original iPhone 3G, the actual price of the phone paid by the service provider is considerably higher, reflecting the common wireless industry practice of subsidizing the upfront cost of a mobile phone and then making a profit on subscriptions," he said.
And what are the major cost drivers? The 16GB flash memory chip is the priciest at $24--and reflects the rising cost of flash chips due to supply constraints, according to iSuppli. This part is also available from Samsung. So there could be some second-sourcing (sourcing the part from a second chip supplier) in the future.
The next rung in the cost ladder is the 3.5-inch display module and touch-screen assembly, at $19.95 and $16, respectively.
Below this, is the main Samsung applications processor. Priced at $14.46, it is the fourth most costly component in the iPhone 3GS. ... Read more
Updated on June 19 at 12:15 p.m. PDT: adding Apple processor discussion in addition to earlier iFixit photo update.
What makes the iPhone 3G S tick, and why is it the "fastest iPhone ever"? Rapid Repair and iFixit tear down the iPhone in Paris and London, respectively, providing some clues.
First, a quick glance at Apple's claims for the iPhone 3G S. The ad copy on Apple's Web site claims that it launches applications faster and that Web pages "render in a fraction of the time." Apple doesn't stop there: "Improved performance and updated 3D graphics deliver an incredible gaming experience, too," according to Apple.
Apple iPhone 3G S disassembled
(Credit: Rapid Repair)Rapid Repair said Thursday night that the 3G S uses a 600MHz Samsung processor based on the ARM Cortex A8 design. The iPhone also integrates a PowerVR SGX graphics chip from Imagination Technologies, according to Rapid Repair.
This, not surprisingly, beats the iPhone 3G (sans "S"), which uses an older ARM design--that runs at about 400MHz--and a prior-generation graphics chip.
The iFixit team also has done a teardown of the iPhone 3G S, with further analysis to follow.
Though the markings on the main Apple processor do not readily identify the chip, both Rapid Repair and iFixit say it is the Samsung S5PC100. Both sites confirmed this in response to e-mail queries.
The "Samsung ARM Cortex A8-based S5PC100 Mobile Application Processor...adopts a 32-bit ARM Cortex A8 RISC microprocessor and a 64/32-bit internal bus architecture, and operates up to 833MHz," according to documentation on Samsung's site.
The chip is also capable of high-definition (HD) 720p video, Samsung states.
iPhone 3G S main circuit board with Apple-branded processor
(Credit: iFixit)CNET Reviews has validated Apple's speed claims, saying "for most native applications that don't depend on a cellular or Wi-Fi connection, the iPhone 3G S was consistently faster."
The review continues: "The iPhone 3G S opened the iPod player almost 5 seconds faster, and it was much quicker at loading some notoriously slow apps. For example, Bejewled 2, which can take up to 12 seconds to load on the iPhone 3G, started in just 5 seconds on the 3G S."
And: "The iPhone 3G S also started up much quicker than the iPhone 3G--we were up and running in 26 seconds instead of 50 seconds."
The Palm Pre also uses a Cortex A8 application processor from ARM and the PowerVR SGX graphics from Imagination.
So, where does the Apple iPhone 3G S get its claimed "2x faster" leap in speed? Rumors are rampant that Apple is using a new chip to crank up the performance.
Why rumors when Apple has already announced the iPhone 3G S? Apple doesn't disclose chip-level hardware specifications. Moreover, Apple clearly wants to convince any prospective buyer than it's not the iPhone's individual parts that matter but the Apple-branded whole.
Apple claims a speed jump up to two times faster than the previous iPhone: a lot of that may be due to the new processor.
(Credit: Apple)The fact is no one will know for sure until teardown specialists like iFixit and iSuppli actually disassemble the iPhone 3G S. "Until we actually decap those chips, we won't know exactly which chip it is," according to Francis Sideco, senior analyst for wireless communications at iSuppli.
Kyle Wiens, one of the founders of iFixit, said Wednesday he is flying to Europe to get his hands on the iPhone 3G S and take it apart.
So, what does Apple claim exactly? Here's the Apple ad copy on its Web site. "The Fastest iPhone Ever. The first thing you'll notice about iPhone 3G S is how quickly you can launch applications. Web pages render in a fraction of the time, and you can view e-mail attachments faster. Improved performance and updated 3D graphics deliver an incredible gaming experience, too. In fact, everything you do on iPhone 3G S is up to two times faster and more responsive than iPhone 3G."
Technology Web site Anandtech claimed Wednesday that it knows what the chip is. "Although unannounced, the iPhone 3GS uses (again) a Samsung (system-on-a-chip) but this time...it's got a Cortex A8 and PowerVR SGX; just like the (Palm) Pre," according to an analysis published Wednesday at Anandtech by Anand Shimpi, editor in chief .
Most smartphones today--including the previous versions of the iPhone--are based on some version of an application processor design from U.K.-based ARM. The Cortex A8 is a newer, faster version of the ARM design.
A T-Mobile Netherlands' Web page has published features that specify "256 RAM" and "600 MHz-processor." The link is cited in a report published Wednesday by AppleInsider.
"My gut tells me the Cortex A8 is very possible," said IFixit's Wiens, responding to an e-mail query. Though he emphasized that he is simply guessing. iSuppli's Sideco said that the 600MHz speed cited on the T-Mobile Web site doesn't necessarily mean that Apple is using the latest and greatest ARM design. "I wouldn't necessarily make that connection," he said, adding that there are 600MHz ARM processors available based on older designs.
That said, if the Anandtech report is true, this means the iPhone 3G S's application processor--essentially the brain of a smartphone--is similar to the processor used in the Palm Pre. The Texas Instruments' chip in the Pre is also a Cortex-A8 design core from ARM.
Here's what ARM says. The Cortex-A8 processor "is the highest performance, most power-efficient processor available from ARM. With the ability to scale in speed from 600MHz to greater than 1GHz." And using argot probably lost on many readers, it is an in-order, dual-issue, superscalar microprocessor core. Over-simplified translation: it can do more than one thing at a time.
These specifications compare favorably to the processor used in the previous iPhone: an older-generation ARM chip running at 412MHz.
The Palm Pre chip also integrates a Powervr SGX 2D/3D graphics accelerator based on a design from Imagination Technologies. The Anandtech report claims that the iPhone 3G S also uses this graphics silicon.
One of the big mysteries is how much tweaking Apple does to the basic ARM chip design. In one respect, this question is answered very visibly since Apple stamps its brand on the iPhone processor. And for future iPhones, Apple is expected to tap proprietary technology from the recently acquired P.A. Semi. "With their acquisition of PA Semi, the apps (application) processor is the most likely slot to get internalized," according to Sideco, referring to the likelihood that Apple will focus in-house development on the main processor inside the iPhone.
Marion Morales, vice president of IDC's semiconductors research program, said last month in a phone interview that though Apple uses Samsung chips, "when you look at the processor itself, they're designing the processor and using Samsung as a foundry (factory)," he said, underscoring the fact that Apple emphasizes internally developed technology and de-emphasizes external suppliers, even large companies like Intel and Samsung.
Texas Instruments raised its outlook for the second quarter Monday, as analog chips and processors for high-end smartphones like the Palm Pre drive sales.
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A Texas Instruments processor is the brain inside the Palm Pre
(Credit: Palm)In a "scheduled update" to its business outlook for the second quarter of 2009, TI said Monday that it expects revenue of between $2.30 and $2.50 billion, compared with the prior estimate of between $1.95 and $2.40 billion. Earnings per share is now expected to be between $0.14 to $0.22, compared with the previous estimate of between $0.01 and $0.15.
Though analog chips are the biggest driver of sequential growth, TI is also seeing a bump in sales of its application processors that go into smartphones such as the Palm Pre. TI's 600MHz OMAP 3430 processor is the brain inside the Pre. The chipmaker also supplies power management, audio, and USB silicon for the Pre.
"Orders were strong in April and May," said Ron Slaymaker, vice president and head of investor relations at TI, in a conference call on Monday afternoon. "We see strength in smartphones--the high-end segment of the market," he said.
And Sprint Nextel executives said Monday that the launch of the Palm Pre on Saturday hit a new sales record for the company. More good news for TI.
The competition to get silicon into the latest and greatest smartphone and mobile Internet device is severe. TI vies for silicon real estate with Samsung, Qualcomm, and Marvell. And the field is getting increasingly crowded: PC industry heavyweights Intel and Nvidia are focusing their considerable resources on the market. Intel, the largest chipmaker in the world, clearly wants to be a major player in the smartphone market by 2011.
And Apple is in the business, too. Though Apple would like it if the iPhone remained a black box (it doesn't matter what's inside, it's the Apple brand on the outside that matters), it is involved in the design of the processors inside its iPhones, according to analysts. The processor inside the iPhone is supplied by Samsung, but branded as an Apple chip.
The TI chip in the Pre is a superscalar design based on the Cortex-A8 core from U.K.-based ARM. The 3430 features "a dedicated level-2 cache and execution of up to twice as many instructions per clock cycle" over previous chips, according to TI documentation. It also integrates a Powervr SGX 2D/3D graphics accelerator.
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