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Supply chain proves Apple is not immune to massive SSD cost increases
SSD storage is now a seller's market. Apple's huge buying power no longer means it can dictate better and long-term deals with its iPhone suppliers than anyone else — for now.The iPhone 18 Pro will cost Apple more to manufacture as NAND storage costs riseJust as it used to buy out as much of TSMC's processor capacity as possible, Apple used to bulk-buy NAND storage. In 2009, for instance, it paid Toshiba $500 million for a long-term deal.In 2012, Apple bought 23% of the world's NAND supply, paying around $0.67/GB. NAND prices fluctuate greatly, but Apple has almost always paid less than market rates — such as in 2018, when it was reportedly paying an incredibly discounted $0.25 per gigabyte. Continue Reading on AppleInsider | Discuss on our Forums
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Supply chain proves Apple is not immune to massive SSD cost increases
[William Gallagher's profile picture]
Wed Feb 25 2026, 11:18 AM EST
4 minute read
The iPhone 18 Pro will cost Apple more to manufacture as NAND storage costs rise
SSD storage is now a seller's market. Apple's huge buying power no longer means it can dictate better and long-term deals with its iPhone suppliers than anyone else — for now.
Just as it used to buy out as much of TSMC's processor capacity as possible, Apple used to bulk-buy NAND storage. In 2009, for instance, it paid Toshiba $500 million for a long-term deal.
In 2012, Apple bought 23% of the world's NAND supply, paying around $0.67/GB. NAND prices fluctuate greatly, but Apple has almost always paid less than market rates — such as in 2018, when it was reportedly paying an incredibly discounted $0.25 per gigabyte.
Apple's ability to fix a price over an extended period of time is usually a benefit to the company, but it can become an issue. Such as when market prices fall below what Apple is paying, or when its supplier's stock is contaminated.
Now, however, according to Digitimes, Apple has lost the ability to command either lower prices, or long-term deals. It's not known what precise sums Apple has agreed to pay supplier Kioxia, but it is said to be double its previous rate.
Then, too, the new deal with Kioxia is now subject to renegotiation every six months, instead of lasting for multiple years.
Why this is happening
All of this is because demand for NAND is far outstripping supply. Kioxia revealed in January 2026 that it had already sold out its capacity for the year, and it expects demand to continue into 2027 because of AI.
"As AI-related investment surges, not only Enterprise SSDs but also the general consumer market are experiencing a chain supply shortage," Kioxia managing director Shunsuke Nakato told reporters in January 2026 (in machine translation).
Kioxia is no longer Apple's only NAND supplier, but it has been one of its biggest. — image credit: Kioxia
At that time, Nakato said the company was bound to different contracts, but even so there were cases where its prices had risen 30% year over year. But he also claimed that Kioxia had introduced a "Gentleman's Agreement," implying that this meant attempting to provide all customers instead of allowing any of them to buy out all stocks.
"It is physically impossible to arbitrarily pull the delivery date or increase the quantity just because orders are high," he said. "We are not just supplying to places that raise prices, but we are distributing annual supply plans with partners who will go together for a long time by mutual agreement."
That was on January 20, 2026, but even in the short time since then, the situation appears to have changed. Even Apple, it seems, is no longer getting even an annual deal.
What happens next
Kioxia is reportedly building out at least one more manufacturing plants, and expects that factory to come online before the end of 2026. Other suppliers will presumably be doing the same, and Apple has previously diversified so that it buys from multiple sources.
Yet all suppliers have the concern that the massively increased demand stems entirely from all of the investment in AI servers. It's affecting both NAND and RAM, but it's also surely not something that can continue.
Yet tell that to AI firms. Industry research firm Gartner estimates that worldwide spending on AI will reach $2.5 trillion in 2026. That's despite the company claiming that the cycle of investing in AI has reached what it calls the "Trough of Disillusionment."
That's roughly midway through the life cycle of a technology issue. According to Gartner, this comes after huge publicity without commercially viable products, and before there are use cases and mainstream adoption takes off.
But Kioxia's Nakato says that with AI, there is more pressure on firms to keep spending.
"Companies have a sense of crisis that they will be eliminated the moment they stop investing in AI, so they have no choice but to continue investing," he said.
Apple is caught in the middle
Apple is of course investing deeply in its own Apple Intelligence, and that's not going to stop suddenly. But traditionally, Apple's immense buying power used to have even more weight because it was a customer who would keep returning year after year.
AI spending surely cannot keep increasing, but even if it ceased, Apple would still be there, buying NAND for its iPhones.
Right now, that appears to be little help for Apple. It's the same with processors. As I said much earlier in the piece, Apple used to be able to buy out TSMC's entire manufacturing capacity what was sometimes called a "sweetheart deal."
But now nVidia has squeezed out Apple to become TSMC's biggest customer. It's not like TSMC has waved Apple goodbye, but it is serving its best customer first — and Apple currently has nowhere else to go.
Depending on how you interpret Apple's public remarks, the company appears to be more concerned about processors than NAND shortage, though. During its latest earnings call on January 29, 2026, Tim Cook implied that this was the pressing issue and by comparison, storage and RAM were not a problem.
In all likelihood, he already knew then that Apple would secure a deal with Kioxia. Certainly Apple knows what volume of NAND it needs, and can expect from suppliers for the next quarter at least.
So given that Apple, perhaps more than most, can afford to spend more on NAND. Maybe quantity was more important to it than the price.
Given Cook's apparent unconcern, perhaps Apple knows that it can secure sufficient NAND for its needs — albeit at some cost. What the company also knows, and no one else does, is whether all of this will mean Apple raising its prices.
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