intel-micron-34nm-nand-flash-production-copy-150x150

Apple Bought 23% of World’s NAND Flash Memory Last Quarter, Made a Huge Profit

Posted in Apple, News on 06/01/2012 by Henry Taylor-Gill

0

Apple bought 23% of the world’s NAND flash memory last quarter, Fortune reports. Apple charges $100 dollars for 16GB more memory in an iPhone, but according to research, Apple buys that memory for a discounted $0.67 per gigabyte, so in fact, 16GB only costs them $10.72.

That’s a pretty impressive profit margin and it shows how much cheaper things are when you buy in bulk. Toni Sacconaghi, author of the research, could not understand why Apple’s competitors did not do the same:

Apple earned an estimated $2.2B+ in operating profits in CQ411 – at 78% gross margins – purely from upselling consumers to products with more NAND storage beyond Apple’s base configuration models. Moreover, a majority of these profits came from iPhones yet no other handset OEM has emulated this strategy…

Ironically, Apple earns nearly twice as much from reselling NAND than all the NAND suppliers combined, with NAND resale responsible for 20% of Apple’s total operating profits last quarter, at an annual run-rate of $10B+.

In the end, it boils down to Apple’s huge cash reserves, which enable them to purchase at greater discounts (and in greater bulk) than companies relying on limited funds, or even on credit.



Henry Taylor-Gill

Author

Henry Taylor-Gill

Henry is a student who is a huge Apple fan, and has used their products since day one. He can remember how happy he was when he received the first iPod back in 2001 as a birthday present. He has an international background, having spent most of his life in France but he now lives in the UK. He is also a native French speaker and can also speak Spanish at a decent level. In addition to tech, Henry is an avid sports fan and has his own sports blog.