A Flash in the iPod

Apple's NAND purchase will likely have ripple effects throughout the flash-chip and broader memory market, Kim said. Despite Apple's huge purchase -- or actually because of it -- average NAND prices are expected to decline in the near future, Kim said.

Samsung recently said that NAND flash prices would decline by double digits percentagewise in the second half of the year, Kim noted. But the decline in Samsung's prices and the broader market is likely attributable to the deal Apple has struck with Samsung.

Although NAND flash on average costs about twice as much as hard drives with similar storage capacities, Samsung has committed to matching the hard-drive price, Kim said. "Samsung has aggressively courted Apple's business, offering extremely low prices on its NAND parts in order to encourage Apple to convert the iPod line from [hard drives] to its semiconductor memory.

"Samsung still will make money on this deal -- even at such low prices. For Samsung, sewing up the marquee iPod memory business is well worth the reduction in margins."

But even if the deal lowers prices, bargain hunters could still be left out. Instead, Apple's purchase will likely tie up much of the excess global NAND capacity, causing the spot market for NAND to jump in the second half of the year, Kim said.

"iSuppli advises ... companies to enter into more stable sourcing agreements with NAND makers. Otherwise they may face a risky supply situation that could negatively impact their business in the second half," he said.