Ouch! iPhone memory costs may quadruple, says JP Morgan
The Financial Times cites JP Morgan analysis which claims memory prices will account for 45% of iPhone component costs next year, up from around 10% of those costs today. That’s going to be a headache at Apple HQ, they say.
It’s not just Apple, of course as every smartphone maker seems likely to experience the same degree of price inflation for the important component and the sad truth is that most competing vendors must use even more memory to make their systems functional simply because of how they are designed. Apple needs to use significantly less, which means that if the cost of this component hurts Apple, competitors will be hurting much, much more.
Apple is historically one of the largest memory customers, but what’s changed is that it now competes with AI makers demanding RAM for data centres. That demand means big players such as Nvidia are outcompeting smartphone vendors for the component, with billions of dollars at stake. It means Apple has less sway on the cost, and competitors have even less than before.
Apple will likely split production runs and release schedules an attempt to manage the demand and is probably going to dig deep into recycling schemes and may take a margin hit to maintain consistent competitive appeal. Well, it should, because if Apple is seeing memory prices climb, competitors will feel it worse and they will have to increase prices before Apple needs to do so.
The wider backdrop is perhaps more frightening as with a depression to dwarf the Great Depression coming to us all as a side impact of the war no one voted for, higher smartphone prices will be the least of our worries as prices of food, energy, and everything else climb sky high even as availability shrinks. My take? I think Apple should work to build market share and take a slight hit on margins, partly because its services and accessory sales will help compensate for that. Competitors just don’t have those advantages.
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