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

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

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.

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