Apple Acquires Anobit; Will Design SSD Storage Chips In-House [Apple's $500M Acquisition of Anobit Might Spell Trouble for Samsung, With Apple Likely to Develop NAND & Flash SSD Storage In-House]

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Apple has just made its biggest acquisition since the company bought NeXT 15 years ago. By acquiring Isreali company Anobit, Apple is likely to drop other vendors providing NAND and Flash-based SSD technologies. Should Samsung be worried?

This week, Apple disclosed that it has acquired Israeli firm Anobit to the tune of $500 million dollars. While Apple is not known for numerous acquisitions, its big-ticket acquisitions usually signal significant changes in how it does business. For instance, 15 years ago, Apple acquired NeXT, resulting in Steve Jobs’ return to the company that he founded, and Apple’s eventual turnaround from possible extinction to now being the most valuable technology company.

This time, Apple’s Anobit acquisition could signal a big change in the way Apple deals with vendors and suppliers, particularly in the NAND and Flash memory business. Since 2005, Apple has focused on implementing Flash storage in devices like the iPod Nano, then moving on to using solid-state storage in the iPhone, iPad and MacBook Air and other devices. Apple has been pre-paying for a steady supply of NAND Flash chips, in order to sustain the use of the technology in notebook computers, tablets and smartphones.

SSDs are not cheap, though, and the use of SSDs on Apple’s notebooks has often been an expensive option for consumers. But with Apple’s acquisition of Anobit, this might change. Anobit does not actually produce these memory chips, but the company designs and implements these technological innovations. Anobit then licenses their designs to companies like Apple, who then sources out production to foundries like Samsung and TSMC. In fact, Anobit has also designed a DSP chip on the iPhone, iPad and Macbook Air, which enables the device to save on energy while using SSD storage.

With Apple now owning Anobit, the company will essentially be able to design SSDs and Flash memory chips in-house, which can reduce licensing and R&D costs. This will then give Apple the competitive advantage of keeping innovations and technologies to itself, as well as the freedom to limit production to certain suppliers. Reading between the lines, this can be troublesome for Samsung, which supplies displays and memory chips to Apple. Apple has reportedly been planning to reduce reliance on Samsung‘s memory chips, as well as moving production of its mobile processor chips to TSMC, instead. This move is in line with such plans.

Samsung and Apple are embroiled in patent wars in four continents, and have both sought to ban each other’s products in these regions. Losing Apple would be devastating to Samsung, with the Cupertino company being their biggest client.

$500 million for a design and R&D company isn’t cheap, but Apple seems to be sitting on enough cash to afford this acquisition. And given that this can help Apple reduce its dependence on Samsung for memory chips, this seems like a sound investment.

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