I loved Asymco during the Apple 2010s run up, but this, inter alia things mentioned in other comments, should give the reader pause and evaluate how much of this is general knowledge x handwaving x vibes versus a practical ground floor understanding in 2026.
> But then Apple can negotiate on another basis and say, well, if you don’t do us a favor here and give us a better rate, then maybe we won’t work with you when all this settles down. You know things are going to settle down. These things are always cyclical. There’s never been a semiconductor boom that’s not followed by a semiconductor bust. Never. And they know it.
I have to think that the RAM suppliers wouldn't be that easy to intimidate with threats, since they know perfectly well how few alternatives Apple has. And they are also perfectly aware that Apple will play hardball with them when the market turns, regardless of whether they were nice to Apple now.
https://www.tomshardware.com/pc-components/ram/hp-reportedly...
It takes billions to tens of billions to setup a fab. It also takes years to get it working. Then when you add in the IP for memory, it pretty much ain't happening.
All the RAM monopoly has to do is wait 3 days before you're producing and drop the price and you're ruined. Meanwhile they've built up a battle chest of hundreds of billions in profits.
China might be the only competition we see come out of this, but only because they are playing the long game and have trillions of US dollars to play the game with.
Do they want to get into a commodity business like RAM production? Maybe not, but if prices stay high long enough that demand for their products falls off, they might think about it.
I know that I personally and my employer are cutting way back on new technology purchases and squeezing as much as we can out of old equipment due to the cost of RAM and storage now.
They sit on billions because they avoid spending their money as much as possible.
The amount they spend on RAM in surrounding few years would represent almost nothing to the massive money hole that would happen if they tried to make their own fab.
Also, these problems tend to affect the entire market, which means if you're big, you're fine. It's when problems don't affect your competitors but affect you that the real issues for these companies crop up.
Fabs are a cutthroat business that's very hard to get into. It costs billions of continual investment to stay a float. That's why there's really only about 3 different companies with cutting edge fabs. TSMC, Micron, and Samsung. Even intel, who built a huge portion of their business on cutting edge fab tech, has struggled to keep funding it. AMD got out of the fab business almost a decade ago (spinning off global foundries) and that spin off is no longer cutting edge. AMD uses TSMC.
Fabs are some of the most expensive factories to operate on this planet due to a constant need for brand new equipment and cutting edge research. That's why there's not an Apple, Google, Meta, or Nvidia fab. That's why there's not an AMD fab. That's why Intel fabs are treading water.
Without the constant investment, you very quickly find yourself in the company of yet another cutthroat industry, the "not cutting edge" fabrication industry. And that, by and large, has already been locked up by about a dozen fab companies.
Again, people might want part of it, but they are also a bit smarter than you are and read history books to see exactly how this is going to play out and then they gladly walk away before they light their money on fire.
In addition, the know-how is concentrated in Taiwan. You literally can't train enough people in enough time to move everything out of there.
For example, Micron is actively building a few new fabs. One of which has been in progress since Biden (pretty close to my home in fact). It's not going to be completed for another 5 years at a minimum. And this is a company that has the experience and partnerships for producing fabs.
Yes, a new company might decide they want to enter the market, but even if they decided, today, "Yes we'll do this" I'd expect a minimum of a decade before they start spinning out their first chips. That's also at least a $1T investment at this point to get started.
Office Hours question asked by by Ian H. on May 1, 2026
Q: Memory prices could move from 15% to 40% of the BOM of a device. This seems incredible. So how can Apple deal with this?
This has been on people’s minds now for what, three, four months? I think since January. I call it the Great Panic of 2026. The great memory panic.
First of all, you have to understand the scale that Apple operates at. The number of devices in the hundreds of millions. It’s not just iPhones, obviously. All of the Apple products consume some memory. And there’s a lead time. When you’re dealing with scale, there’s a lead time. There’s usually a couple years of lead time. And every supplier who works with Apple is doing it because they love volumes.
Now, volumes are good for suppliers because they can also predict things in their own operations. They can plan, they can raise capital. Usually they need loans to do that, and they get good terms on loans if it’s a long-term payback. And there’s a lot of moving parts there that benefit scale.
The difference with memory pricing that we’re seeing a lot of anxiety around is at the margin. That is to say, there’s a base production, and then there’s a variable production. That variable production comes when somebody orders, “Hey, can I have something next month?” And the smaller suppliers tend to not have that long-term planning or the volumes that can fill the pipe. And so the marginal pricing on memory has gone through the roof. It spiked, and that’s what we’re seeing. But that’s on the variable bit.
So Apple negotiates on the base load. Now, of course, that marginal cost is going to eventually infect, if it continues long enough, base price. In fact, suppliers are going to say, well, even if it’s two years out, we’re going to have to ask for more, because there’s so many other players that also we anticipate will be two years out. But then Apple can negotiate on another basis and say, well, if you don’t do us a favor here and give us a better rate, then maybe we won’t work with you when all this settles down. You know things are going to settle down. These things are always cyclical. There’s never been a semiconductor boom that’s not followed by a semiconductor bust. Never. And they know it.
So they’re happy to make mint on this volatility right now. So much so that I heard Samsung’s making more money now with memory than Nvidia’s making with their processors. So memory suddenly is the new gold. A year ago, two years ago, it was about compute. Now it’s memory. Who knows what’s next?
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But if you’re in this business for the long term, and you want to play games, Apple’s going to be there a lot longer. You could believe that AI is going to be going at this rate forever. We’ll see if the profit model can sustain it. But I just speak from experience. There’s a lot of these things that happen in the phone space with all kinds of components. There were always some shortages.
There was storage. The iPod killed a hard drive supply chain. Apple monopolized the CNC machines that made the aluminum Macs. And these things happen. By the way, that monopoly is no longer in effect. Eventually, somebody built enough of the tooling and sold them to Apple’s competitors. And if they want to make an aluminum enclosure, they can do so now. But that’s how it is in this game, and nobody plays it as well as Apple does.
If you read the book on China — Apple in China — there’s a lot of anecdotes about this. So I can’t get excited about any of these stories about supply crunches, other than there being a windfall for somebody and an anxiety, a panic for somebody else.
And again, other analysts are starting to come around to notice that maybe this all settles into Apple gaining a whole lot of share, because all the other competitors won’t be able to get any memory. So Apple could also just lock up everything and say, alright, we’ve got the biggest checkbook in the business, we’ll take a hit on margins. As if we care, as if that matters. We go from 49% to 45%. Which is where we were two years ago. And then in doing so, we’re going to take out everybody but Samsung. So we get in a situation where a lot of marginal players just disappear. And Apple locks up even more.
And when you go for the jugular, you do all this, and then you launch a low-end product that’s even cheaper, which is what the Neo looks like to me. I mean, Neo might be a prototype. The Neo might be John’s trial balloon out there. Maybe he has a theory — I’m just speculating now — that Apple is going to go for the jugular on the iPhone in a couple of years. The iPhone’s going to be $499. It’ll be as good as the best iPhone today. And they’re going to launch that against a landscape where everybody else is losing money at $800 a phone. And so they’ll just quit.
Now, it’s uncharacteristic, but it’s a low-end disruption coming from Apple. It’s completely possible. It’s well within their ability. And if they want to, they could. There’s a lot going on here with what strategic intent is from John, and I think he comes with a fresh thinking on this. Not that Tim was unwilling, but I think he knew what works, and he was not willing to stray too far from what was reliable. And John may just think that, I know we can pull this off. And we’ll go for a different way. Who knows?
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This was one of the questions asked by the participants in Asymco’s May 2026 Office Hours live Q&A session, open to Asymco One subscribers.