The Beleaguered Chip Sellers Getting Their Revenge on Apple

For decades, Apple used its position as the largest buyer of flash memory to drive down prices and impose demanding contract terms. Suppliers such as Kioxia had to offer Apple their best prices, open their books to audits, and sometimes absorb the cost when Apple declined deliveries as prices fell. Apple’s enormous orders helped keep chip factories busy, but left manufacturers feeling that the iPhone maker captured much of the value. The balance has now shifted: AI data-center companies have sharply increased demand for flash, pushing prices up roughly fivefold in a year. Hyperscalers now buy twice Apple’s share of the market, and companies including Meta, Microsoft and Amazon have agreed to higher-priced, long-term supply contracts, giving manufacturers stronger bargaining power.

The price surge exposes Apple’s dependence on inexpensive storage and threatens its lucrative upgrade sales. The company is estimated to spend $25 billion on flash this year, compared with $6 billion in 2025 for a similar quantity. A 256-gigabyte iPhone storage upgrade that cost Apple about $15 last year now costs around $66, while the customer price remains $200; higher-capacity options also cost Apple much more. Apple has raised prices across many products, but the pressure could erode margins that historically exceeded 80% on storage upgrades. Consumers may respond by delaying device purchases, while suppliers await whether Apple can recover its former leverage.