Apple Loses Its Grip on Memory Suppliers as AI Demand Surges

Hardball tactics

According to the report, Apple held back-to-back meetings that let rival suppliers meet one another, which raised competitive pressure. Some sessions ran past midnight with no dinner break. Apple also demanded "Most Favored Customer" status, meaning no buyer could get a lower price, and reserved the right to audit suppliers' books. It reportedly won an arbitration settlement worth tens of millions of dollars after finding that Micron sold chips to another customer for less. Apple also ordered large volumes at low prices, then refused some shipments when market prices fell, leaving suppliers with inventory and forcing further discounts.

The balance shifts

Microsoft, Amazon, Meta and Google are now competing hard for memory and storage. TechInsights estimates that about two years ago Apple bought roughly twice as much flash memory as those four combined; today their combined purchases are about double Apple's. Flash prices have risen about fivefold in a year, and suppliers are signing long-term contracts at higher prices.

TechInsights estimates Apple's flash bill could reach about $25 billion in 2026, versus about $6 billion in 2025, for broadly similar volumes. The impact reaches iPhone profits too: the memory cost of upgrading the iPhone 18 Pro from 256GB to 512GB rose to about $66 from $15 a generation earlier, while Apple still charges $200. Its gross profit on that upgrade falls to about $134 from about $185 on the iPhone 17 Pro.

Apple said it has worked with many suppliers for decades, values those partnerships and looks forward to continuing them.