People have been wondering what should Apple do with its cash hoard since the dawn of time and the company’s silence on the matter has only fueled speculation and increased pressure on the new CEO to pay a cash dividend, which they had stopped doing in 1995. If TechCrunch is to be believed, which relayed a Calcalist report in Hebrew, Apple is going to spend between $400 and $500 million to acquire Anobit, a fabless flash memory chip maker based in Israel.

To put this in perspective, the Anobit acquisition would be bigger than any since the 1997 purchase of NeXT for $404 million that brought back Steve Jobs. Anobit specializes in flash storage solutions for enterprise and mobile markets and making them cheap and reliable using its proprietary MSP technology (which stands for ‘Memory Signal Processing’). MSP lets Anobit engineer more reliable flash memory chips with significantly longer usable life.

Anobit’s list of clients isn’t public, but the Calcalist report claims Apple is a client:

According to Calcalist reporter Assaf Gilad, Apple relies on the company’s solutions for the iPhone, iPad and MacBook Air product lines, among other devices. South Korean Hynix is said to use Anobit’s solution for a flash memory chip you can find inside the iPhone 4S.

Apple is likely interested in the 200-people company for its engineering talent, much in a way they snapped up Intrinsity, the chip maker behind the iPad brain and P.A. Semi, a fabless semiconductor company which specializes in power-efficient processor architectures. If the Anobit rumor pans out, this would mark both a significant acquisition for Apple in terms of the money spent and even tighter vertical integration as they will get to control the performance of their all-flash based iOS devices, the MacBook Air (and soon other notebooks) while helping reduce bill of materials as flash chips are usually one of the biggest cost drivers. That, plus things we may never dream of as Apple never buys startups unless it is able to add value, innovate and compete more effectively using the acquired technology.

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