Korean companies Samsung and Hynix recently confirmed that they have signed separate contracts with Apple to provide the US company with NAND flash memory chips. Apple will make initial payments of US$500 million to Samsung and US$250 million to Hynix for production of the chips. These two deals will both run through 2010. Besides Samsung and Hynix, Apple works with three other semiconductor makers for NAND flash memory, including Toshiba, Micron, and Intel.

However, Korea's Fair Trade Commission has started an investigation into the deal between Samsung and Apple, as Korean domestic music player makers suspect that Samsung is supplying the chips to Apple at unfairly low prices.

In related news, Micron and Intel have announced the establishment of a joint venture, called IM Flash Technologies, for the production of memory chips. Micron and Intel will invest US$1.2 billion each in the joint venture, and both companies will add another US$1.4 billion in 2008 if demand continues to be strong. Intel will also pay Micron a license fee of US$270 million for flash memory technology. Chips will be made at Micron's plants, starting in the first quarter of 2006. The joint venture will boost Micron's presence in the NAND flash segment, while presenting Intel with new business opportunities other than NOR flash. According to the newly established joint venture, it will supply NAND flash memory chips to Apple, for which Apple will make an initial payment of US$250 million.