Apple reportedly acquired the Israeli flash memory design firm Anobit in a deal that cost the company $500 million dollars. Anobit management told its staff of the acquisition this week, according to Israeli newspaper Calcalist, after Apple's head of R&D visited the company's headquarters last week. Additionally, Apple is supposedly planning to build a research center in Israel as well, conveniently located in a hotbed of silicon design.

The acquisition is one of the most expensive for Apple since it acquired NeXT in 1996—15 years ago to the day, in fact—and should cement the company's strategic shift to solid-state flash storage for its products.

Apple and flash storage, sitting in a tree

Apple began standardizing on flash storage for its mobile devices with the launch of its iPod nano in 2005. Since then, the company has continually relied on pre-paying for huge stocks of NAND flash supply to keep its iPods, iPhones, and iPads in constant production.

Apple has been transitioning its laptops to rely on flash storage, too—albeit much more slowly due to the much higher costs of SSDs compared to traditional hard drives. That transition began with the launch of an SSD-equipped MacBook Air in 2008. In 2010, Apple revised and expanded the MacBook Air line and standardized on SSDs for all models. None of its MacBook Pro laptops come standard with an SSD (yet), but it has been offering flash storage as a build-to-order option for a couple years.

(SSDs remain a built-to-order only option for its desktop computers too, including the Mac Pro, iMac, and Mac mini, but desktops continually represent a smaller minority of Apple's sales quarter after quarter.)

As many Ars readers know, flash storage offers three major advantages for mobile devices: the lack of mechanical parts mean there's less to break, especially if a device gets bumped or dropped. Flash storage also typically uses less power than spinning magnetic media. And finally, its high speed means less bottlenecks for the lower-powered processors typically used in smaller devices, as well as "instant-on" capabilities.

But flash storage does have some drawbacks as well. One we already mentioned is cost—a 480GB SSD costs about $800, while a 500GB hard drive runs just over $100. Packing more storage into a smaller space also requires state of the art technology, so getting more storage space for an iPhone or MacBook Air can bump the cost differential even higher.

Additionally, flash storage reliability drops quickly with long-term use. Single-level cell designs last up to several years, but the multi-level cell designs that have increased in popularity for mobile devices due to increased storage density actually decrease the useable life span of flash chips.

Anobit to the rescue

That's where Anobit and its technology come in. Anobit has developed unique technologies that can increase the reliability of multi-level cell designs. In fact, Apple already uses an Anobit-designed DSP chip in iPhones, iPads, and MacBook Airs to extend the life of the NAND flash chips in those devices.

Anobit—like Apple's other recent silicon design acquisitions, PA Semi and Intrinsity—is a fabless design house. Its specialty is creating, testing, and verifying new designs that implement its technological innovations, and then licensing the designs to companies like Apple. By buying up Anobit, Apple can keep its flash storage improvement technologies all to itself as a competitive advantage.

Still, Apple will have to hire contract fabs or other manufacturers to build chips using the improved designs. Given the headaches that Samsung, Apple's top chip supplier, has caused Apple in the smartphone marketplace, the Anobit acquisition is perhaps another sign that Apple is prepared to drop Samsung altogether and move production of in-house designed custom silicon to someone like Taiwan Semiconductor Manufacturing Company.

Furthermore, building an R&D center in Israel will put Apple among other top tech giants that have located research centers near "Technion," or Israel's Institute of Technology. That will also put Apple's silicon design team in close proximity to partners like Intel and Qualcomm.

The basic hardware of the iPhone isn't hard to replicate—an ARM-based processor, NAND flash, Qualcomm baseband, a touch screen, and a handful of largely off-the-shelf parts are fairly easy to come by these days. But highly optimized designs for efficient, low-power operation and long-term reliability don't come cheap. With Apple able to leverage its own in-house expertise and contracting out production in the kind of volume that Apple sees with the iPhone, iPad, and MacBook Air, it can afford to integrate those optimizations into its products while still maintaining market-competitive prices and market-leading profits.