This means Apple is going to pay more money for their devices. Previously Apple could control memory suppliers and squash the prices. It means Apple's previous period of controlling memory suppliers and forcing them to the low rock bottom prices are over. Consumers can expect higher iPhone prices as Apple shifts cost of the components to consumers.
Apple's historical procurement leverage has diminished as competitors drive up component costs
Apple has always used aggressive procurement methods in the past to achieve good conditions. Mandatory financial audits, 'most favored customer' clauses. These methods have made Apple strong to push memory manufacturers to accept low margins and essentially forcing the whole industry to play on a low margin financial battlefield. It gave Apple lots of control in memory supply chain in the past for a long time.
Poor pricing and poor margins has made memory industry investment in memory capacity stop in 2023. One of the Micron executives says 'a lot of the industry investments got shut down in 2023 because of really poor pricing and really poor margins. ' This low investment in memory capacity has led to supply shortage and cost pressure.
Apple's strength has been eroded with other competitors such as NVIDIA, AMD, Qualcomm beating Apple's bid on LPDDR5X RAM volume. These Tech giants have the willingness to pay for high end memory. This has changed the power dynamic in the market. We can now see Apple introducing iPhone price hikes to reflect the higher cost of components.
This is the new change of memory market dynamics and Apple no longer has the power that it had in the past when it comes to memory procurement. Apple has to accept the cost rise now due to the strong demand from other major tech companies. Consumers can expect these cost rises to start affecting the pricing in the near future.
I hope this means the iPhone 16 gets a bigger discount later.
Does the article specify if LPDDR5X is the only RAM type affected or if older generations see price hikes too?
The piece focuses on LPDDR5X as the specific victim of NVIDIA and AMD outbidding Apple. Older chips likely remain stable due to lower demand.
Finally memory costs go up. Maybe GPU prices will drop now that everyone is fighting for chips.
My old phone is still fine.
Apple usually absorbs these costs for one generation before passing them on to consumers.
Not tbh if the base model stays the same price.
We will see if the performance per dollar actually drops or if Apple just cuts features elsewhere.