How Apple can pay more for memory and still win in business
A seriously interesting slice of analysis from Horace Dediu at Asymco basically plans out how Apple can lean into the memory price crisis and turn it into a massive advantage – particularly around iPhone.
To an extent this echoes what Apple seems to be setting its stall up to accomplish: Bifurcating the high-, medium-, and lower-end devices across its products, while also raising expectations even at the more price conscious end of the market. (That’s what MacBook Air does – comprising an older chip with a lower cost but still great computer).
The impact is to widen Apple’s reach into the more price sensitive markets while also ensuring it maintains its reputation for quality. Apple could accomplish this for the iPhone too – and probably intends to in the next iPhone e-series. At the same time, the company’s recent deal with Intel could be about securing supply of the slightly older chips it wants to use in these affordable systems. Intel may be unable to produce TSMC/Apple’s highest end processors but might have what it takes to affordably churn out older chips for a MacBook Neo level range of hardware.
Apple can lean into memory prices on two paths – its scale means it can get far better deals than smaller players ever can, while the quality of its systems mean it can produce better devices at better prices than competitors can.
Anyway, that’s some of my take – you should read the whole thing at Asymco, meanwhile here’s a summary.
Apple and the 2026 memory crisis
- Memory costs have spiked from 15% to 40% of device manufacturing costs, but this is mostly a problem for smaller companies that can’t gain scale in advance. Apple makes deals year in advance.
- Apple’s massive volume and multi-year lead times let it negotiate good prices, in part because its orders are so huge that even lower per unit prices gives manufacturers a base income, supporting the rest of the business.
- Memory: Suppliers like Samsung are currently earning more from memory than processors (like Nvidia’s).
- Apple can afford to let margins dip (e.g., from 49% to 45%) to absorb costs, a luxury rivals don’t have.
- By using its cash hoard to lock up available supply, Apple could force marginal players out of the market.
- Apple could launch lower cost devices to aggressively take market share while competitors are struggling to stay profitable at $800.
- Apple knows how to secure advantage through supply chain management, look at how it locked up storage to support iPad or CNC machines for the Mac.
- If this is Apple’s plan, then it has a breakout opportunity, if its new CEO thinks he can make such a plan succeed.
- Did I say you should read the whole thing?
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