Business · Companies · 3 hrs ago
AI demand is shifting the balance between Apple and memory suppliers
Apple once used tough tactics to push memory suppliers for lower prices.
Suppliers reportedly faced close scrutiny of their costs and pressure to accept the lowest prices.
AI data centres have created powerful new buyers for memory chips.
Microsoft, Amazon, Meta and Google now buy far more NAND flash memory together than Apple, according to an industry estimate cited in the story.
That demand has helped memory makers gain leverage, while Apple faces higher costs and has struggled to secure some supplies.
Rising memory prices may also hurt PC demand, and Intel has said the pressure could continue into the first half of next year.
Long-term agreements, or LTAs, are being raised as a possible new approach to memory supply, though the story does not say that a deal has been reached.
AI data centers have increased demand for memory chips, shifting leverage from Apple to memory suppliers.
TechInsights estimates that Microsoft, Amazon, Meta and Google now buy twice as much flash storage as Apple.
Apple has raised prices on more than a dozen products this year, citing the memory chip shortage.
The shortage has also reduced Apple’s profit on some storage upgrades.
SK Hynix forecasts that the memory chip shortage will continue through 2030.
- Who
- Apple and memory suppliers, including Kioxia and Sandisk, are at the center of the story.
- What
- AI demand has increased competition for memory chips and shifted bargaining power toward suppliers.
- When
- The shift has occurred over the past year; SK Hynix forecasts the shortage will last through 2030.
- Where
- The story concerns the global memory chip market.
- Why
- AI companies are building large data centers that use substantial amounts of flash storage and RAM.
Apple
Memory suppliers
Bargaining power
Apple
Apple historically used its position as a major buyer to negotiate low prices and closely monitor suppliers’ sales.
Memory suppliers
AI-driven demand from other large buyers has given suppliers more leverage to seek higher prices.
Supply commitments
Apple
Apple sometimes refused delivery when flash prices fell, according to the reports.
Memory suppliers
Suppliers faced unsold inventory and some resisted Apple’s requests when other customers offered more.
Current market
Apple
Apple says it values its suppliers and has attributed product price increases to the memory shortage.
Memory suppliers
Suppliers and industry figures point to past price pressure and increased demand as factors behind current constraints and prices.
Sandisk refused Apple's request for additional supply because it had customers willing to pay more, and Tony Blevins threatened retaliation, according to the reports.
Memory prices fell by a third, according to Micron CEO Sanjay Mehrotra's account in Hankyung.
Tim Cook said rising memory prices could no longer be absorbed and that product price increases were unavoidable, Hankyung reported.
SemiAnalysis CEO Dylan Patel said memory companies were now squeezing Apple, Hankyung reported.
The Wall Street Journal published its report on Apple's relationship with flash suppliers, according to Hankyung.
MacRumors reported that suppliers had gained leverage amid a memory chip shortage driven by AI data-center demand.
- Apple storage upgrade
- TechInsights estimates gross profit of $134 on a $200 iPhone 18 Pro upgrade from 256GB to 512GB.
- Previous storage upgrade
- TechInsights estimated gross profit of $185 on the equivalent iPhone 17 Pro upgrade last year.
- Flash purchases
- Two years ago, Apple bought nearly twice the flash storage of Microsoft, Amazon, Meta and Google combined, according to TechInsights estimates.
- Current flash purchases
- Microsoft, Amazon, Meta and Google now buy twice Apple's share, according to TechInsights estimates.
- Price forecast
- SK Hynix forecasts the memory chip shortage will persist through 2030.
2 sources
What people are saying
We've worked with many of our suppliers for decades, and we deeply value their partnership over the years. We look forward to continuing our important work together.
Price increases are unavoidable.
In the past, during downturns, Apple squeezed memory companies; now memory companies are squeezing Apple.
crawl on his knees