Slow iPhone sales in China ease flash memory market shortage

Global flash memory supply has improved as Apple has seemingly reduced its orders for the component with Samsung in response to lower-than-anticipated iPhone sales in China, a report suggests.

Samsung distributor, Supreme Electronics, has claimed supplies of flash memory chips from Samsung “became sufficient” recently, leading that company’s distribution partners to anticipate better than expected earnings this month.

There have been limited supplies of the component for the last couple of months, following Apple’s introduction of new flash-based iPod products and the expansion of the iPhone into new markets, including China.

Samsung favours Apple orders in response to an existing $500 million supply arrangement with that company. Availability of the component has eased, “mainly because iPhone sales in China are not as good as those in other countries,” writes Digitimes, citing “industry sources”.

September saw a major shortage of flash memory as Apple ramped-up its products, causing the larger memory makers to favour the company’s supply demands.

In July, Apple confirmed a half-billion dollar deal with Toshiba for supply of flash memory chips. Apple chief operating officer, Tim Cook, stressed the importance of the deal, saying, “We view flash as a very important component for us, because we use it in so many of our products.”  He noted that Apple uses 3% of the world's flash storage.

Despite the slow start to Chinese iPhone sales, analysts have previously predicted Apple will sell up to seven million units of the device in the country next year. However, the relatively high price of the product seems to have depressed sales in the country.

Sales will likely climb somewhat should Apple and China Mobile (China’s biggest mobile phone network) reach a deal to offer the device in the country next year. The existing arrangement with China Unicom is understood to be non-exclusive, while discussions with other carriers continue.