The Beleaguered Chip Sellers Getting Their Revenge on Apple

For years, Apple used its dominance as the largest buyer of flash memory to force suppliers such as Kioxia and Micron into low prices and restrictive terms. Its procurement team sought the best deal through audits, “most favored customer” clauses and a willingness to cancel or delay orders when prices fell, leaving manufacturers with surplus chips. Apple’s scale nevertheless helped keep factories busy, while its own customers paid far more for added storage: the company typically earned gross margins near 80% on storage upgrades across iPhones, iPads and Macs.

The balance of power has shifted as AI data centers have sharply increased demand for flash memory. Hyperscalers now buy more than twice Apple’s share, and flash prices have risen roughly fivefold in a year. Suppliers have gained leverage and signed longer-term, higher-priced contracts with major cloud companies; Apple’s estimated flash bill has surged from $6 billion in 2025 to $25 billion in 2026. That rise squeezes profits on storage upgrades: for example, Apple’s cost for an iPhone 17 Pro’s 256-gigabyte upgrade climbed from about $15 to $66, even as the consumer price remained $200. Apple has raised prices across products, but faces the risk that customers will delay purchases. Suppliers, meanwhile, wonder whether Apple can ever restore the bargaining power it once wielded.