It has been reported that Apple has concluded a long-term supply contract for NAND flash memory, and market participants believe that Kioxia will be the supplier.
Although there is a view that this agreement does not include a condition to cap the wholesale price to Apple, it is considered to be a significant step forward in securing the necessary quantity stably.
NAND shortage is also causing price hikes
One of the reasons for the current price hike of NAND flash memory is that the supply quantity is insufficient to meet the demand due to the rapid increase in demand for AI servers.
Therefore, securing the necessary NAND flash memory through a long-term contract is considered effective in avoiding a situation where you are forced to purchase even at a high asking price when quantity is insufficient.
Possibility of contract up to 2031
Market participants believe that the long-term supply contract for NAND flash memory that Apple is said to have concluded will last for about three to five years.
If the contract is for five years starting in 2026, we will be able to secure a certain amount of NAND flash memory until around 2031.
There are pessimistic predictions that supply shortages and price hikes for NAND flash memory and DRAM will continue until around 2030.
Therefore, a contract valid until around 2031 would be of great significance to Apple in helping it survive a period of expected supply shortages.
Is securing the required quantity a priority over price?
While this long-term supply contract appears to include conditions regarding a certain supply quantity, there is a view that there is no price ceiling set.
From this, it can be seen that Apple prioritized securing the quantity necessary for product production rather than purchasing NAND flash memory cheaply.
If we cannot secure the necessary NAND flash memory, we will not be able to produce finished products such as iPhones, iPads, and Macs as planned.
If the purchasing price increases, there are countermeasures such as passing it on to the selling price, but if there is a shortage of parts itself, it will be difficult to increase the number of units manufactured.
Therefore, securing a certain quantity over the long term without setting a price ceiling is considered important in maintaining product shipment plans for the next few years.
Are you considering long-term contracts for DRAM?
Apple is also reportedly considering long-term supply contracts for LPDDR5X, which is used in current iPhones, and LPDDR6 DRAM, which is expected to be used in the future.
Candidate suppliers are Samsung Electronics, SK Hynix, and Micron, but it is unclear whether a long-term contract similar to that for NAND flash memory will be realized.
As the supply of DRAM is becoming tight due to demand for AI servers, Apple’s future product plans will likely depend on whether it can secure the required quantity over the long term.
Source: IT-no-ie
Photo: Apple Hub/Facebook
Source: iPhone Mania
