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Palm commits AMD to memory

Hoping to avoid flash memory shortages, the handheld maker says Advanced Micro Devices will become its primary provider of the chips through 2003.

Hoping to avoid flash memory shortages, handheld maker Palm announced Wednesday that Advanced Micro Devices will become its primary provider of the chips through 2003.

Last year, cell phone demand gobbled up components, such as flash memory and LCD displays, that are also used in handheld computers.

As a result, Santa Clara, Calif.-based Palm and other handheld makers couldn't get enough components to keep up with consumer demand. The announcement from Palm and AMD was designed to ease any concern that a similar situation will happen again this year.

"We don't normally say who our suppliers are, but we wanted to ease concern that Palm would be able to get components for devices," Palm spokesperson Marlene Somsak said.

The agreement with AMD is not exclusive, but Somsak would not say which other companies will be supplying flash memory to Palm.

Last year, Palm was forced to go to spot markets, where smaller companies sell components for a slight premium, in order to purchase flash memory. This led to lower profit margins per device for Palm. The new agreement with Sunnyvale, Calif.-based AMD is also designed to help the company do a better job controlling costs.