Apple under pressure: the race for components for the next iPhone

Apple under pressure: Apple's race for components to be used in the production of the next iPhone: $AAPL 🍏

Apple is currently (unusually) in talks with memory component supplier Kioxia for long-term memory contracts and without a price cap. 💵

This is much more than a story about memory contracts,

For years, Apple used its immense purchasing power to pressure suppliers, compare offers, and maintain flexibility between supply sources.

For years, Apple's question was simple: "Who will sell to me the cheapest?" ❓

Now the question has changed to: "Who can guarantee me enough memory so I can continue to produce iPhones?" 📲

And this is a dramatic shift in Apple's power. 🍏

Data centers need enormous quantities of memory for AI accelerators, servers, storage, and infrastructure.

AI customers are willing to commit to large quantities and long periods, and sometimes pay a premium to secure supply.

Thus a new battle has emerged: not just over price, but over production capacity.

Apple is no longer competing only against smartphone manufacturers; it is competing against cloud giants, data center operators, and AI companies that are willing to pay more than it to lock in supply for years to come. 💵

For Apple, expensive memory is preferable to an iPhone that cannot be produced. 🍏

According to TrendForce, the cost of memory in the iPhone 18 Pro with 256 GB capacity is expected in Q3 2026 to be 4 times higher than the previous year. 🔼

The implication is dramatic.

The weight of memory within the total component cost of the new iPhone is expected to jump from 10% in the initial 256GB Pro model to about 34% (!). 🔼

In the first half of 2027, it may even exceed the 40% mark. 🔼

Meaning, memory ceases to be just another component within the iPhone and becomes one of the main factors determining production cost and the iPhone's cost. 🍏

Apple has 3 options here:

Absorb the price increase and hurt profit margins.

Pass the cost to the consumer by drastically raising prices for all iPhone 18 models.

Change the device's specifications or memory quantities.

And the foldable iPhone adds even more pressure on Apple. 📲

Its launch price in the US is estimated at $2,099-$2,299, with higher GB models potentially exceeding the $3,000 mark. 💵

With such a device, the real big risk is having an expensive and sought-after product without enough components for production... 🚨

Therefore, for Apple, an expensive multi-year contract could be "insurance." 💡

And this time, Apple is willing to pay the premium,

For Kioxia, a 3-5 year contract with Apple without a price cap is almost a dream... 💵

The company gains long-term demand certainty, can plan investments, expand production capacity, and allocate capacity in advance. 📊

Apple gets the thing it is starting to fear most:

certainty that this capacity will not be taken by another customer. 🤝

And this is exactly the opposite,

the big buyer is starting to chase the manufacturer. 💵

This move may also extend to the DRAM memory market,

Here, Samsung Electronics, SK Hynix, and Micron come into play:

According to reports, Samsung Electronics plans to allocate about 60%-70% of its production capacity to long-term DRAM memory contracts. 🏭

If the trend expands, smartphone manufacturers may find themselves competing for capacity already pre-sold to large customers... 💵

It's no longer a game of "who gives me the best price",

it's a game of "who is left with goods." 🔎

And now to the really important question: who profits from all this mess? 💵

In memory for foldable devices, estimates point to a share of about 30% for SK Hynix, about 15% for Samsung Electronics, with Kioxia and other manufacturers sharing the rest. 💵

For investors, this is precisely the environment where memory manufacturers can start to enjoy more significant pricing power. 📈

The stocks we are following:

SanDisk - $SNDK 🔎 SK Hynix - $SKHY 🔎 Micron - $MU 🔎 Kioxia - US exposure via the $DRAM ETF 🔎 Samsung Electronics - US exposure via the $DRAM ETF 🔎

When buyers start competing among themselves for demand, manufacturers get something they lacked for years:

Power. 💵

The story is not that Apple is paying more for memory components,

the story is that Apple is starting to behave like a company that fears there won't be enough memory to produce the next iPhones... ⚠️

When one of the world's largest and most powerful buyers is willing to consider a 3-5 year commitment without a price cap,

it means that power in the memory market is starting to shift from buyers to manufacturers. 💡

And this may be one of the most important signals that the current cycle in the memory market is no longer a short round of price increases, but a deeper shift in the balance of power. ⚡️

The market does not fear a high price as much as it fears a shortage, and in the memory war, whoever holds the chips holds the cash... 💵