Apple's invested in a 'very strategic' $3.9b component supply agreement, but what is it?

Here's an interesting little note from Apple's record-breaking Q1 2011 financial sales call: according to CFO Peter Oppenheimer and acting CEO / COO Tim Cook, the company's made a two-year, $3.9 billion deal with three suppliers to secure a "very strategic" component for its products. Cook wouldn't identify what the component was, citing competitive reasons, but he did say the arrangement was much like Apple's famous deals to source iPod flash memory that date back to 2005. According to Tim, "We think that was an absolutely fantastic use of Apple's cash, and we constantly look for more of these, and so in the past several quarters we've identified another area... these payments consist of both prepayments and capital for processes and tooling, and similar to the flash agreement, they're focused in an area that we think is very strategic."

Importantly, Apple paid out $650m under its agreements for this mystery part this past quarter, and it's planning to spend another $1.05b in payments next quarter, so this is already happening in a big way -- and frankly, we're dying to know what it is, since Apple has a long history of squeezing the market for components it wants. Our best guess? High-density displays for the iPhone and iPad -- we've heard some rumors of deals with Toshiba and Sharp, but that's just conjecture, and we don't know who the third vendor is. We're digging, but in the meantime listen to Peter and Tim in the clip after the break.

Continue reading Apple's invested in a 'very strategic' $3.9b component supply agreement, but what is it?

Apple's invested in a 'very strategic' $3.9b component supply agreement, but what is it? originally appeared on Engadget on Tue, 18 Jan 2011 19:16:00 EDT. Please see our terms for use of feeds.

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Source: http://www.engadget.com/2011/01/18/apples-invested-in-a-very-strategic-3-9b-component-supply-ag/

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