March 31 (Bloomberg) -- Apple Computer Inc., the world's largest maker of portable music players, agreed to buy at least 20 percent of Hynix Semiconductor Inc.'s NAND flash memory chips until 2010 to secure components for its iPod devices.

Apple, which uses NAND as the main component for its iPod Nano players, agreed in December to buy 40 million gigabytes of the chips this year from Hynix, according to the Ichon-based company's annual report submitted to regulators today. Apple agreed to increase orders by at least 180 percent a year until the end of the decade, according to the document.

The report reveals details of Apple's agreement last year to buy NAND chips from Hynix, Samsung Electronics Co., Toshiba Corp., and a venture between Intel Corp. and Micron Technology Inc. In November, Apple said it agreed to prepay $1.25 billion for the chips for the next three months.

Hynix shares rose 2.1 percent to close at 28,900 won in Seoul.

Every quarter, Cupertino, California-based Apple will match orders to Hynix from the preceding three-month period or buy at least 20 percent of the company's NAND production, whichever is larger, according to the document. The chips will be sold at a price that won't exceed what was specified in the December agreement, Hynix said, without stating the amount.

Terms of Apple's contract have widely been known since last year, Hyundai Securities Co. analyst Jay Kim said.

Parts of the agreement are binding and some are non-binding, said James Kim, head of Hynix's investor relations team. He declined to comment further.

To contact the reporter on this story: Young-Sam Cho in Seoul at ycho2@bloomberg.net

Last Updated: March 31, 2006 01:28 EST