[News] Audits, Rejected Orders and a Shot iPod: Apple’s Reported NAND Playbook Before the AI Memory Crunch

Apple, once one of the most powerful buyers in the NAND flash market, is losing some of its negotiating leverage as AI-driven demand gives memory suppliers greater pricing power. According to The Wall Street Journal, the company reportedly pressured flash manufacturers for years to disclose detailed financial and operational information, allowing it to monitor pricing and ensure no other customers secured better deals.

The aggressive tactics reportedly left a lasting impression on suppliers. One Kioxia sales executive was so frustrated with Apple’s negotiating practices that he once took a rifle and shot his old iPod, the report adds.

Inside Apple’s Hardball Flash Procurement Strategy

One of Apple’s tactics was to exploit falling flash prices to secure further concessions. According to the report, the company would sometimes refuse delivery of previously ordered chips when market prices fell, leaving suppliers with excess inventory, including chips customized for Apple. The disputes often ended with suppliers agreeing to further price cuts.

Apple also reportedly required flash suppliers to designate it as a “most favored customer,” ensuring that no other buyer received a lower price. The company could audit suppliers’ financial records to enforce the provision, according to sources cited by the report.

These audits also gave Apple access to factory-level production data, helping its negotiators assess how urgently suppliers needed orders. More than a decade ago, Apple discovered that Micron had sold flash to another customer at a lower price, resulting in an arbitration settlement worth tens of millions of dollars, the report notes. Apple’s audits were so frequent that it even negotiated a volume discount with auditing firm Deloitte, the report adds.

The pressure sometimes turned confrontational. In late 2015, SanDisk refused Apple’s requests for additional flash supply because other customers were willing to pay more. According to the report, Apple’s then-procurement chief Tony Blevins threatened retaliation against a SanDisk salesperson, saying he would make the company’s then-CEO, Sanjay Mehrotra, “crawl on his knees.” Mehrotra is now chairman and CEO of Micron Technology.

AI Demand Shifts Pricing Power Back to Flash Suppliers

AI infrastructure demand is now shifting the balance of power in the memory market. Meta, Microsoft, and Amazon have signed long-term supply agreements with Kioxia this year at higher prices, helping protect the chipmaker’s profits if market conditions weaken and strengthening its negotiating position with Apple, Wall Street Journal reports.

Apple itself is reportedly adjusting its procurement strategy amid rising costs. South Korean media outlet Economy Tribune notes that Apple has reportedly turned to a long-term NAND supply agreement, with market watchers identifying Kioxia as the likely partner. While the terms remain undisclosed, the move could mark a departure from Apple’s historically aggressive purchasing practices. The report adds that Apple may also pursue long-term agreements with Samsung Electronics, SK hynix, and Micron to secure future LPDDR5X and LPDDR6 supplies.

The cost pressure is becoming increasingly evident. According to TrendForce, memory’s share of the 256GB iPhone Pro’s bill of materials rose from around 10% a year earlier to 34% in 3Q26 and could exceed 40% in 1H27. TrendForce also estimates that the iPhone 18 Pro’s total BOM cost could rise 38% YoY, potentially forcing Apple to sacrifice margins to maintain shipments.

Read more

• [News] Apple Said to Have Signed NAND LTA with Kioxia Seen as Likely Partner; Foldable iPhone Memory Suppliers in Focus
• iPhone Duo Launch Sparks Strong Demand, but Fold-Area Structural Reliability and Hardware–Software Integration Remain Challenges, Says TrendForce

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