Apple Sets Flash Supply Pacts

Apple(AAPL Quote) said Monday it has locked in supplies of a key component of its iPod music players -- flash memory -- through 2010 through agreements with five major semiconductor producers.

Apple unveiled supply pacts for so-called NAND flash memory with Intel(INTC Quote), Micron(MU Quote), Hynix, Samsung and Toshiba.

Apple intends to prepay a total of $1.25 billion for flash memory components during the next three months, the company said in a morning press release.

"We want to be able to produce as many of our wildly popular iPods as the market demands," the company said in the release.

Speculation has been rife for about a month that Apple planned some kind of long-term deal to ensure a steady supply of NAND chips, which are the preferred storage medium for digital music players.

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