SSD storage is now a seller’s market. Apple’s massive buying power no longer means it can dictate better, long-term deals with its iPhone suppliers than anyone else—for now.
Just as it used to buy up as much TSMC processor capacity as possible, Apple has been buying NAND storage in bulk. In 2009, for example, 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 wildly, but Apple has almost always paid below market rates — such as in 2018, when it reportedly paid an incredibly discounted $0.25 per gigabyte.
Apple’s ability to fix a price for an extended period of time is usually a boon for the company, but it can become a problem. For example, when market prices fall below what Apple is paying, or when its supplier’s inventory is contaminated.
Now, however, according to DigitimesApple lost the ability to order either lower prices or long-term deals. It is not known exactly what amounts Apple has agreed to pay supplier Kioxia, but it is said to be double the previous rate.
The new agreement with Kioxia is now subject to renegotiation every six months instead of lasting several years.
Why is this happening?
All because demand for NAND far exceeds supply. Kioxia revealed in January 2026 that it has already sold out of its capacity for the year and expects demand to continue in 2027 due to AI.
“Due to the increase in AI-related investments, not only the enterprise SSD, but also the general consumer market is experiencing supply chain shortages,” Kioxia CEO Shunsuke Nakato told reporters in January 2026 (machine translation).
Kioxia is no longer Apple’s only NAND supplier, but it was one of its largest. — image credit: Kioxia
At the time, Nakato said the company was bound by various contracts, but there were still instances where its prices rose 30% year-on-year. But he also claimed that Kioxia implemented a “gentleman’s agreement”, implying that it was an attempt to provide all customers instead of allowing any one of them to buy back all the shares.
“It is physically impossible to arbitrarily drag the delivery date or increase the quantity just because the orders are high,” he said. “We don’t just deliver to places that raise prices, but we distribute annual delivery plans with partners that will work long-term by mutual agreement.”
That was on January 20, 2026, but even in the short time since then, the situation seems to have changed. Even Apple doesn’t even seem to get a one-year contract anymore.
What happens next
Kioxia is reportedly building at least one more manufacturing plant and expects to have the factory up and running by the end of 2026. Other suppliers are likely to do the same, and Apple has previously diversified to buy from multiple sources.
Still, all vendors fear that the massively increased demand stems solely from all the investment in AI servers. It affects both NAND and RAM, but it’s also definitely not something that can continue.
Still, tell that to the AI companies. Industry research firm Gartner estimates that global spending on artificial intelligence will reach $2.5 trillion by 2026. That’s despite the company saying the AI investment cycle has reached what it calls a “Trough of Disillusionment.”
This is about halfway through the life cycle of a technology problem. According to Gartner, this occurs after massive advertising without commercially viable products and before mainstream use cases and expansion occur.
But Kioxia’s Nakato says that with AI, there’s more pressure on businesses to spend.
“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
Of course, Apple is investing deeply in its own Apple Intelligence, and that’s not going to stop suddenly. But traditionally, Apple’s huge buying power carried even more weight because it was a customer who came back year after year.
AI spending certainly can’t keep increasing, but even if it stopped, Apple would still be there buying NAND for its iPhones.
Right now, that seems like little help for Apple. It’s the same with processors. As I said much earlier in this article, Apple used to be able to buy out TSMC’s entire manufacturing capacity, sometimes called a “sweetheart”.
But now nVidia has overtaken Apple to become TSMC’s biggest customer. It’s not like TSMC is waving goodbye to Apple, but it’s serving its best customer first — and Apple has nowhere else to go right now.
However, depending on how you interpret Apple’s public remarks, the company appears to be more concerned with the processors than the NAND shortage. During his last earnings call on January 29, 2026, Tim Cook indicated that this is a pressing issue and, by comparison, storage and RAM are not a problem.
He most likely knew even then that Apple would secure a deal with Kioxia. Apple certainly knows how much NAND volume it needs and can expect at least the next quarter from suppliers.
So given that Apple, perhaps more than most, can afford to spend more on NAND. Maybe quantity was more important to him than price.
Given Cook’s apparent indifference, perhaps Apple knows it can secure enough NAND for its needs—albeit at a price. What the company also knows, and no one else does, is whether all of this will mean that Apple will raise its prices.
Apple has reportedly reduced its production costs for other components to avoid increasing the price of the iPhone 18 series. But at the same time, the cost of the A20 processor for this series is expected to cost Apple twice what it paid for the A19.
Even Apple can’t continue to absorb cost increases when they all seem to be doubling.
But Apple also knows that it can weather anything. If he has to pay more now, then when the AI bubble bursts and Apple still needs NAND, we may be back in a buyer’s market.