Have you ever wondered how powerful Apple’s market status is? To give you an idea, here is a passage from a scathing report published by The Wall Street Journal that was published a few days ago:
“In late 2015, Sandisk refused Apple’s request to send additional supplies because there were already customers willing to pay more. Blevins threatened a Sandisk vendor with retaliation, and said Sandisk’s CEO, Sanjay Mehrotra, would be “on his knees” crying back to Apple, according to a person familiar with the matter.
For years I have heard anecdotes about Apple’s immense bargaining power in the supply chain. After all, the company is among the largest buyers of a wide range of components, from lens and silicon to memory and display panels. In 2026, no component will shake up the consumer electronics industry quite like memory chips, all thanks to demand from the AI sector.
Apple is also feeling the sting. This year, the company not only increased the cost of new products, but also gave a bump to the sticker price of older products, which historically receive a price cut when new generation models arrive. And yes, Apple has admitted that the memory shortage (and the resulting price increase) is simply infinite. But it seems that the players in the storage market are not only happy to collect massive profits, but also smile with sweet revenge.
Apple typically strong-arms suppliers into giving it preferential treatment, not only in terms of early access and allocation, but also in terms of pricing. But as per the WSJ report, Apple’s negotiating tactics were nothing less than eyebrow-raising. Or, for lack of a better word, outright barbaric exploitation of its market status.
The company reportedly employed many tough tactics to further reduce the price of flash memory it received from suppliers. The first was a policy of non-commitment. And when prices fell, Apple would immediately reject shipments of memory chips that were customized for its devices, leaving suppliers with massive stockpiles.
At the forefront of these moves was Apple’s head of procurement, Tony Blevins. “Blevins, who left Apple in 2022, sometimes set up back-to-back meetings with suppliers so that rival sales teams could run into each other, raising competitive tensions,” the report noted. Meetings often ran past midnight without a meal break, forcing clients to pack protein bars to prepare.
Apple’s contract even had a provision that allowed it to audit suppliers’ books so the company could make sure it got the lowest price. The company had such deep knowledge of the operations of the suppliers that it was even aware of the operations on the factory floors.
Such was the extent of the audit that Apple even won itself a discount from Deloitte, which conducted audits on Apple’s behalf. In one instance, when Apple learned that Micron was selling flash chips to another company at a lower price, Apple took the matter to court and won a million-dollar settlement.
But the most shocking incident involved storage giant Western Digital. Here’s the recap:
When flash supply tightened around 2017, Western Digital, Sandisk’s new owner, required Apple to pay a fee to reserve flash chips without committing to sell it, people familiar with the strategy said.
Blevins was apoplectic. He wrote the date on his office whiteboard and circled it, sent a photo to Western Digital executive Mike Cordano and promised payback, according to people familiar with the exchange.
Blevins got his chance when Flash prices fell a year later. Cordano and his colleague Jerry Kagele went to Blevins’ office with a refund check as a peace offering, according to people familiar with the meeting. Blevins demanded they never ask for a booking fee again, which the men agreed to in a handshake deal, people familiar with the interaction said.
As punishment, he told the men that if Western Digital wanted Apple to buy its flash chips, it would have to pay the iPhone maker to test them, the people said. Even then, Apple was not obliged to buy anything.
Blevins then had them escorted by Apple security.
And here is the surprising part. As flash prices collapsed to nearly 5 cents per gigabyte over the decade, Apple charged customers hundreds of dollars to upgrade the storage on iPhones. During the post-pandemic cooling as the consumer electronics market slumped, Apple raked in about $14 billion in profits from flash memory upgrades alone, while the entire flash memory industry is running at $19 billion in losses in 2023.
Apple won’t be the only player in the industry to engage in tough negotiating tactics, but the sheer sway it commands in the supply chain is in a league of its own. In 2026, Apple’s position is significantly weakened because AI giants are willing to pay a much higher price for memory chips, and memory manufacturers are happy to oblige. In fact, the stakeholders see it as a sweet retribution after years of being put in a tight position by Apple.
The supply chain situation is not going to ease next year, so it would be interesting to see how Apple handles the situation. Apple absorbed the rising cost of memory and storage longer than its rivals, but in 2026 the inevitable happened, and the price of Apple equipment went up. I’m not sure what will happen next year, but if the bill of materials continues to rise, prepare your wallet for an even deeper cut on Apple purchases.