Apple's purchase of Anobit would give it a leg up on rivals

Anobit would allow Apple to use the least costly NAND flash

Apple's buyout of Israel-based solid-state drive (SSD) manufacturer Anobit Technologies will give the company a significant technological boost in the mobile market, and the deal could yield huge cost savings.

Apple is the industry's largest NAND flash consumer, so acquiring Anobit gives it a means of addressing the reliability problems that arise as solid-state memory shrinks in size.

According to published reports, Apple will pay around $500 million for Anobit. It sees the purchase of a NAND flash technology developer as key to its product strategy going forward. The acquisition of Anobit would be Apple's largest purchase since it bought NeXT in 1996. NeXT, which produced high-end workstations, was founded by Apple co-founder Steve Jobs after he was fired from Apple in 1985.

Apple has been using NAND flash memory in its products since 2005, when it began selling the iPod Nano media player. It has continued expanding its use of flash with an all-flash MacBook Air, the iPad tablet and SSD options for its MacBook Pro line of laptops.

The purchase of Anobit addresses several issues for Apple. It frees the company from dependency on flash component makers such as Samsung and Intel, which lead the market in NAND flash production. Using Anobit's controller technology -- a type of error correction code (ECC) -- would allow Apple to choose the cheapest NAND flash chip inventory available for its products.

"It could ultimately impact the cost of the NAND flash they buy if they're able to continue to develop [technology] that allows them to use the cheapest flash possible," said Michael Yang, a memory and storage analyst at market research firm IHS iSuppli.

Industry analysts said they weren't surprised by Apple's move, noting that it follows an industry trend. In March, SSD-maker OCZ Technology Group signed an agreement to acquire privately held Indilinx, a maker of popular NAND flash controllers, for $32 million. In October, fabless semiconductor maker LSI Corp. announced it was acquiring flash controller maker SandForce.

Neither Apple nor Anobit have confirmed the sale, and neither company responded phone calls or emails seeking comment.

Objective Analysis analyst Jim Handy said Apple won't be saving much money by owning its own controller technology. "These controllers cost from $5 to $20. The NAND flash in most SSDs is significantly more expensive than that," he said.

Joseph Unsworth, a Gartner analyst specializing in NAND flash and SSD, said that "if this acquisition was to take place" it would support Apple's strategy of using technology that allows it to innovate and differentiate itself from competitors with flash management and system software. He added that it would also enable Apple to use the cheapest flash available, and that should help boost the company's profit margins.

"That's why Anobit is interesting," Unsworth said. "This is about flash management and the integration of this technology into their greater ecosystem" of both hardware and software. Noting that intellectual property "is always important," he added, "having it is always better than not."

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