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Apple’s Flash Storage Suppliers Gain the Upper Hand
The Wall Street Journal reports that Apple’s flash storage suppliers now have the upper hand during the memory chip shortage.
Flash storage is the memory that holds apps, photos, and games in phones, laptops, and consoles. For years, Apple set the terms with the companies that make it. AI data centers changed that balance.
How Apple Used Its Buying Power
As the iPhone took off, Apple became the world’s largest buyer of flash storage. Those huge orders gave the company strong bargaining power. The report says Apple and its former head of procurement, Tony Blevins, pushed hard. Procurement is the team that buys parts.
The report describes several tactics:
- Apple ordered flash at rock-bottom prices, then sometimes refused delivery when market prices were falling. Suppliers were left with piles of unsold chips, including some made just for Apple.
- Kioxia executives, whose Japan-based company was once called Toshiba Memory Corporation, joked that they felt like Charlie Brown trying to kick a football while Lucy keeps pulling it away.
- Apple pushed flash makers to open their books so it could track sales and make sure no other buyer got a better deal.
The Sandisk Example
Around the end of 2015, Sandisk refused Apple’s request for extra supply because other customers were willing to pay more. According to a person familiar with the call, Blevins threatened a Sandisk salesman with payback. He said he would make Sandisk’s chief executive, Sanjay Mehrotra, beg his way back to Apple.
The report’s examples name Kioxia and Sandisk. Apple’s other suppliers, such as SK Hynix and Samsung, were not mentioned.
How AI Data Centers Flipped the Balance
AI companies are building huge data centers that use large amounts of flash storage and RAM, the fast memory devices use while they run. The demand created a severe memory chip shortage, and suppliers now have other buyers willing to pay.
The report cites TechInsights estimates. Two years ago, Apple bought nearly twice as much flash storage as Microsoft, Amazon, Meta, and Google combined. Today, hyperscalers, the largest cloud companies, buy double Apple’s share.
What It Means for Apple Prices
Customers have absorbed much of the hit. On June 25, Apple raised prices on 14 products, including all Macs and iPads, the Apple TV, HomePod, HomePod mini, and Vision Pro. Apple’s statement said the growth of AI data centers caused a surge in demand for memory and storage. Tim Cook said in June that price increases were unavoidable.
Our Apple price increase breakdown lists the new price for each product.
Apple Keeps Less Profit on Storage Upgrades
Higher prices could lower demand, and the report says Apple’s profit margins on storage upgrades have shrunk. TechInsights estimates Apple’s gross profit on the same upgrade for two iPhone models:
| iPhone Model | Upgrade | Estimated Gross Profit |
| iPhone 17 Pro (last year) | 256GB to 512GB | $185 |
| iPhone 18 Pro | 256GB to 512GB | $134 |
An iPhone 18 Pro buyer spends $200 on that upgrade, so Apple’s estimated gross profit is $134 of it. Gross profit is what is left after the cost of the part.
An Apple spokesperson says the company has worked with many suppliers for decades and deeply values those partnerships.
How Long the Shortage Could Last
SK Hynix, the world’s second-largest memory chip maker, warned on an earnings call this week that the shortage could last through 2030. The company also says long-term agreements already cover more than half of its production capacity for 2027 and 2028, according to its earnings presentation.
If the forecast holds, Apple may wait years to regain its old bargaining power.
Gamers could feel the pressure too. The shortage makes it harder for smartphone, PC, and game console makers to avoid price hikes, Fortune reports. Our guide to hidden gaming costs shows how memory prices reach gamers and how to save.
If memory prices stay high through 2030, will you keep your current phone, PC, or console longer?
Sandisk’s own earnings call on October 29 lines up with the WSJ story. CEO David Goeckeler said “we estimate that data center has expanded from approximately 20% of industry bits early in the decade to roughly half of the industry bits today”, and that data center outgrew the market this quarter “as we allocated more supply to address the growing demand from this end market.” CFO Luis Visoso put data center revenue at $4.8 billion, up 61% from the prior quarter, against $5.8 billion for Edge (phones, PCs, cars), up 7%. He also said about half of Sandisk’s bits for fiscal 2027 and about two-thirds for fiscal 2028 are already under its multi-year supply agreements. So the buyers setting terms now are the ones signing up years ahead. The full call: https://equibles.com/stocks/sndk/calls/2027-q1
Data: Sandisk’s fiscal Q1 2027 earnings call, processed by Equibles.