The News
Microsoft, Amazon, Meta and Google now buy about twice as much flash memory as Apple. Two years ago, Apple bought nearly twice as much as all four combined.
Flash prices rose about fivefold over the past year as AI data centers bought more storage. A gigabyte now costs more than 30 cents, up from 5 cents at the 2023 low.
Apple has raised prices on more than a dozen products this year and blames the memory shortage.
The details
The cloud giants pulled ahead of Apple by building AI data centers that use huge amounts of flash storage and memory. Meta, Microsoft and Amazon each signed long-term supply contracts with Kioxia this year at higher prices. Kioxia is a Japanese flash maker that also sells to Apple.
SK Hynix has signed long-term deals with 14 big customers, including large cloud providers. The deals usually run five years and cover more than half its capacity for 2027 and 2028.
Kioxia aims to sell half of its 2028 volume to key customers under long-term agreements.
SK Hynix expects demand for memory to outrun supply through 2030.
The same shift has cost Apple the upper hand it held over flash suppliers for more than a decade. Apple used to order flash at low prices and sometimes refused deliveries when prices fell, which left suppliers holding unsold chips. Apple still charges $200 to double iPhone Pro storage, but the flash behind that upgrade now costs it about four times as much.
Apple is expected to spend about $25 billion on flash this year.
An Apple spokesperson said the company values its supplier relationships and looks forward to “continuing our important work together.”
The higher memory costs are also driving up prices for the devices warehouses and fleets buy. Zebra raised list prices on its mobile computers 15% on Oct 5, citing the rising cost of memory and other components. Its RFID readers went up 5%. Many of its printers went up 3%.
“There’s just no way not to raise price given the significant increase in memory pricing today,” Zebra CEO Bill Burns said in August.
Zebra expects about $120 million in higher memory costs this year. It raised the gain it expects from price increases to $90 million.
Panasonic raised prices on its Toughbook rugged laptops and tablets Oct 1, citing component and semiconductor costs.
Worth noting
Zebra also said memory supply limits how many devices it can ship. Chief financial officer Nathan Winters said in August that fourth-quarter sales are capped by the memory supply Zebra expects. The company wants five to seven qualified suppliers for each of its main memory types.
(Photo: Unsplash)
