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

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

Apple is currently (unusually) negotiating with memory component supplier Kioxia for long-term memory contracts, with no 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 amounts of memory for AI accelerators, servers, storage, and infrastructure.

AI customers are willing to commit to large quantities and long periods, sometimes paying 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 willing to pay more than it does 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 256GB iPhone 18 Pro is expected to be 4 times higher in Q3 2026 compared to 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. 🔼

In other words, memory stops being just another component inside the iPhone and becomes one of the main factors determining production cost, and thus 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 in-demand 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 might 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 tracking:

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

When buyers start competing among themselves for demand, manufacturers get something they have 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 worried 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 with no price cap,

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

And this could be one of the most important signals that the current cycle in the memory market is not just a short round of price increases, but a deeper shift in the balance of power. ⚡️

The market doesn't fear high prices as much as it fears scarcity, and in the memory war, whoever holds the chips holds the cash... 💵