Reports say the flash memory used in a $200 iPhone storage upgrade now costs Apple approximately $66. That is up from about $15.
Booming demand from AI hyperscalers has quintupled flash memory prices and shifted negotiating power to suppliers. The increase puts pressure on a significant source of Apple’s profit.
Apple has previously earned an estimated $10 billion in gross profit from storage upgrades. Margins on those upgrades have been around 85%.
The cost surge comes as Apple prepares for its fiscal fourth-quarter earnings call on November 2. It will be the first call led by new CEO John Ternus.
Apple’s stock edged higher in after-hours trading. Shares of memory suppliers SanDisk and Western Digital rose more sharply following the news.