Recently during Apple’s earnings call, Chief Financial Officer Peter Oppenheimer and current Chief Operating Officer Tim Cook both mentioned that the company had sealed $3.9 billion US worth of contract deals that would ensure the company access to components over the next two years. Although Cook didn’t mention any details of the deals secret, claiming it is “something I don’t want our competition knowing,” but he did say it was “focused in an area that we feel is very strategic,” and compared it to Apple’s earlier decision to pre-purchase a billion dollars of RAM. There is currently speculation going on about the deal being for components related to the anticipated Retina Display for the iPad 2.

Back in 2005, when both the iPhone and the iPad were still on the drawing boards, Apple paid $1.25 billion to Hynix, Intel, Micron, Samsung, and Toshiba to guarantee supplies of NAND flash memory up through 2010. As a result, Apple was able to successfully manufacture and push out millions of iPhones, iPods, and iPads even through frequent supply shortages. Cook compared this new prepayment to that deal, saying “We think that was an absolutely fantastic use of Apple’s cash,”and the company “constantly look[s] for more of these.” He did in one area during his speech make an acknowledgment that may provide a hint: he said that “in the past several quarters, we’ve identified another area and come to recent agreements.”

During his remarks, Oppenheimer said that Apple paid out $650 million under its agreements for this mystery part this past quarter and that the company is planning on further spending another $1.05 billion in payments next quarter as well. The industry and many analysts are buzzing with rumors of deals with Toshiba and Sharp (both of which are LCD vendors). Oppenheimer also noted that the prepayments were for these payments consist of both prepayments and capital for processes and tooling,” which would end up being consistent with a new high-res screen – something that Apple could legitimately call a “Retina Display” – in a 9.6-inch form factor. With the supply of flash memory guaranteed at any point in time and the rumors of high resolution displays leading the list of expected iPad 2 announcements, it is a pretty reasonable assumption to think that APple may have gone a long way towards cornering the market for LCD components.

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[Source: AppleInsider]

Authors: TechHead

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