Apple Starts Buying Spree. All In on Mobile Storage DRAM at Any Cost. What Is the Reason?

TradingKey - According to recent reports, Apple (AAPL) is 'hoarding all available mobile DRAM in the market at premium prices, even at the expense of operating margins,' to block competitors' supply channels. Previously, in the first-quarter price negotiations, Apple accepted the exorbitant bills presented by suppliers without reservation.

While the market was previously concerned about the cyclicality of memory chips, Apple's move appears to have invalidated those concerns.

Why is Apple sacrificing profit margins to aggressively procure DRAM?

On the surface, Apple's aggressive buying spree is meant to secure its product supply, but at a deeper level, it is a meticulously orchestrated strategic gambit.

According to reports from Wccftech, Apple accepted substantial price hikes for memory chips from Samsung and SK Hynix; after Samsung opened with a 100% price increase, Apple accepted the terms immediately without negotiation. For SK Hynix, Apple agreed to a price increase of nearly 100%.

Previously, analyst Ming-Chi Kuo pointed out that Apple's strategy is to absorb higher component costs internally rather than passing them on to consumers. Apple aims to maintain the iPhone 18's starting price while offsetting margin erosion through service revenue.

Mobile DRAM is already in a state of severe supply-demand imbalance, and Apple’s massive concentrated procurement has further intensified the shortage. CEO Tim Cook previously cited memory chip shortages and TSMC's 3nm capacity constraints as primary bottlenecks. Nevertheless, Apple has not waited passively, instead utilizing its deep cash reserves to turn industry-wide challenges into a tool for locking out competitors.

What is the actual impact of Apple’s aggressive procurement strategy?

According to South Korean media reports, both MediaTek and Qualcomm have cut their production schedules for 4nm chips, involving a wafer volume of approximately 20,000 to 30,000 units, which translates to a production loss of about 15 million to 20 million mobile chips.

The 4nm process is primarily used in mid-to-low-end smartphone processors, meaning that Android devices powered by these two platforms will face significant shipment pressure, which objectively opens a window for Apple to expand its market share.

Samsung has also not been spared. Samsung has announced price increases for the 512GB and 1TB versions of several tablet models in the South Korean market, while also raising prices for the Galaxy S25 Edge, Galaxy Z Fold 7, and Galaxy Flip 7, as storage cost pressures are rapidly being passed on to end consumers.

In contrast to the passive pressure facing its competitors, Apple, by leveraging large inventory secured in advance and economies of scale, is expected to hold a significant advantage in maintaining product pricing stability, thereby gaining the upper hand in the market competition against major rivals such as Samsung.

Apple's strategy regarding end-user pricing is also clear: the $599 MacBook Neo enters the $600 to $800 mainstream laptop market with precise pricing, directly competing with Windows and Chromebook products at the same price point.

How large is the global DRAM supply-demand gap?

The fundamental reason for Apple's buying spree is that the global DRAM market is undergoing its most severe supply crisis in history. Apple's stockpiling strategy is turning this disadvantage into a competitive edge under the same market conditions.

From the perspective of the global competitive landscape, memory manufacturers' supply-side capacity is heavily skewed toward AI. The three major DRAM giants—Samsung, SK Hynix, and Micron—are shifting capacity significantly toward high-margin High Bandwidth Memory (HBM), a critical component for AI chips. Consequently, the supply of traditional mobile DRAM is being systemically squeezed.

Although the combined DRAM wafer input of the three major manufacturers is expected to reach approximately 18 million units in 2026—a year-on-year increase of only about 5%—it still falls far short of market demand. SK Hynix revealed that its entire HBM capacity for 2026 is already sold out, with traditional DRAM inventories dropping to an extremely low level of approximately four weeks.

Meanwhile, massive orders that are difficult to fulfill are emerging on the demand side. The AI computing power arms race is devouring capacity. Goldman Sachs projects that the DRAM supply gap will reach 4.9% and 2.5% in 2026 and 2027, respectively, far exceeding previous expectations.

Counterpoint noted that memory procurement demand from the AI industry has exceeded that of all other segments combined, and the DRAM shortage is expected to last until at least the second half of 2027.

On the pricing front, the consumer segment is experiencing "structural price hikes." Gartner expects that overall DRAM and SSD prices will rise by 130% by the end of 2026, driving up PC and smartphone prices by 17% and 13%, respectively, compared to 2025 levels. UBS previously estimated that the DRAM shortage would persist until the first quarter of 2027.

How will the "memory shortage wave" reshape the industry landscape?

Apple's aggressive procurement strategy effectively transforms an uncontrollable industry crisis into a controllable competitive weapon. In a context where the DRAM supply-demand gap remains unbridgeable in the short term, Apple's strategy of trading short-term profits for medium-to-long-term market share expansion is distinctly evident.

The memory shortage is reshaping the competitive landscape for global consumer electronics manufacturers. For smaller players, maintaining prices will exacerbate profit erosion and could even lead to significant losses; thus, passing costs onto consumers has become the only means of survival. In contrast, Apple’s tactics—offering short-term value to consumers and its aggressive stockpiling strategy—may enable it to emerge as a leader and secure greater leverage in market share.