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For years, Apple dictated the prices for flash memory. Now, manufacturers hold the upper hand, and Apple is paying many times more. A report in the Wall Street Journal reveals how tough Apple used to be in negotiations and why this is now backfiring.
In a report by Rolfe Winkler, The Wall Street Journal describes how Apple has dealt with its flash memory suppliers over the years. The newspaper bases its findings on statements from memory industry executives, analysts, and estimates from market research firm TechInsights. Apple, through a spokesperson, stated that it has worked with many suppliers for decades and highly values these partnerships.
The report fits into a debate that has been ongoing since the summer. In June, Micron suggested that Apple may have also contributed to the storage crisis, without naming Apple directly. The Journal now provides the specific details.
Key Facts at a Glance
- According to TechInsights, flash storage costs around five times as much as it did a year ago, driven by data centers for AI.
- Apple is expected to spend around $25 billion on roughly the same amount of flash memory in 2026, compared to $6 billion the previous year.
- Two years ago, Apple bought almost twice as much Flash as Microsoft, Amazon, Meta and Google combined; today, the major cloud providers buy twice as much as Apple.
- According to the report, Apple demanded access to business figures and best price guarantees for years; an Apple manager is said to have openly threatened a manufacturer.
How Apple negotiated in the past
For years, Apple was the world's largest purchaser of flash memory. According to the Journal, the company consistently leveraged this position, pressuring suppliers for years to disclose detailed business and operational figures. Apple wanted to ensure that no other customer received more favorable terms. Furthermore, Apple secured its position as a preferred customer with a best-price guarantee.
The extent of the frustration is illustrated by a scene from the report: A sales manager for the Japanese manufacturer Kioxia, formerly Toshiba Memory, shot his old iPod with a rifle in the desert. Mark Newman of Bernstein Research says the manufacturers felt cheated by Apple's pricing power. Walt Coon of TechInsights puts it this way:
Apple has historically driven a very hard bargain with memory suppliers.
The SanDisk episode and its aftermath at Micron
The most heated incident occurred at the end of 2015. SanDisk refused to supply additional quantities to Apple because other customers were paying more. Apple's then-head of purchasing, Tony Blevins, allegedly threatened a SanDisk sales representative, saying he would make SanDisk CEO Sanjay Mehrotra grovel on his knees.
Mehrotra now heads Micron, one of the major memory manufacturers. According to the Journal, Apple has also had a dispute with Micron: More than ten years ago, Apple caught the company selling flash memory to another customer at a lower price and won a double-digit million-dollar settlement in arbitration.
This very company indicated in June that it had told customers who had been very aggressive with their pricing during the last downturn that this was not constructive. Micron manager Sumit Sadana did not name any names at the time. With the Journal's report, the connection is now much more plausible than it was four months ago.
How much Apple storage costs today
Since the boom in AI data centers, the balance of power has reversed. Flash storage cost around 5 cents per gigabyte in 2023; now, according to the report, it costs more than 30 cents. The major cloud providers have overtaken Apple as their most important customers and are binding manufacturers with long-term contracts: Meta, Microsoft, and Amazon, according to the Journal, signed such contracts with Kioxia this year, committing to higher prices.
| Key figure | Earlier | Today |
|---|---|---|
| Flash price per gigabyte | approximately 5 cents (2023) | more than 30 cents |
| Apple's spending on Flash, according to TechInsights, is roughly the same amount. | $6 billion (2025) | approximately $25 billion (expected for 2026) |
| Apple's Flash Purchase compared to the major cloud providers | almost twice as much as Microsoft, Amazon, Meta and Google combined (two years ago) | half as much as the major cloud providers |
| Apple's cost for doubling from 256 to 512 GB | $15 (iPhone 17 Pro, 2025) | around $66 (iPhone 18 Pro) |
For the upgrade from 256 to 512 GB, customers in the US pay an additional $200. With the iPhone 17 Pro, Apple retained a gross profit of $185 on storage costs of $15, while with the iPhone 18 Pro, it was around $134 on storage costs of approximately $66. The storage upgrade business thus remains lucrative, but the profit per device has shrunk by about a quarter.
The leverage now lies with the manufacturers
According to the Journal, Apple ignored warnings from analysts and was caught off guard by the developments. Tim Cook has since compared the surge in memory prices to a once-in-a-century flood. On June 25, Apple raised prices for Macs, iPads, and other devices, citing memory costs as the reason.
No relief is in sight. SK Hynix announced at the end of October that DRAM and HBM are practically sold out until 2029 and expects the shortage to continue until 2030. Reports are already circulating that Apple will have to pay significantly more for iPhone memory in 2027.
Why revenge appeals to customers
I consider this report more than just an industry anecdote. It explains why Apple has hardly any allies in the storage crisis: Those who have forced the best prices for years won't receive preferential treatment during a bottleneck. Cloud providers, on the other hand, have committed themselves to long-term contracts and higher prices, and I assume that manufacturers will prioritize them during this shortage.
For buyers in German-speaking countries, this isn't a distant supply chain issue; the price increase in June also applied here. With shortages expected until 2030 and higher purchase prices anticipated for 2027, I don't expect Apple to lower prices again next year.
Would you have forgiven Apple's hard line against its suppliers as long as the devices remained affordable – or do you think it's fair that the tables have now turned? Let us know in the comments which side you're on.
