Apple and the Power Rebalancing with "Micron & Co.": Unpacking the Profit Bill Behind the iPhone

Odaily资深作者

@wenser2010

2026-06-28 06:01

This article is about 3232 words, reading the full article takes about 5 minutes

Memory chips take center stage, looking back to accuse "certain customers of suppressing prices during the industry downturn."

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Core Thesis: In Apple's iPhone profit structure, Apple itself dominates (approximately 25% net profit margin), while key component suppliers like memory manufacturers have long seen razor-thin profits (<3%). Driven by AI demand, memory prices have skyrocketed, reversing the supply-demand dynamic. Memory makers are now gaining leverage, forcing end-device companies like Apple to face cost pressures and raise prices.
Key Elements:
1. Imbalanced iPhone Profit Distribution: Apple's net margin consistently exceeds 24%, capturing about 75% of the industry's total profit; memory makers like Micron only secure roughly 3% of the profit, while TSMC gets around 4%-5%.
2. Memory Cost Evolves from "Incidental" to "Critical Component": From accounting for 2% of the iPhone X's cost in 2017, it is projected to reach 12%-15% (approximately $60-$80) for the iPhone 17 series in 2026—a nearly eightfold increase.
3. AI Demand as the Core Driver of Price Hikes: AI servers require 8 times the DRAM of standard servers, forcing Samsung, SK Hynix, and others to shift production capacity towards high-margin HBM, leading to supply shortages in the consumer memory market.
4. Rare Statements from Cook and Musk: Tim Cook described the memory price surge as a shock "unseen in 40 years," leading Apple to raise prices across its lineup. Elon Musk also publicly called it the "most aggressive price jump" he has ever witnessed.
5. Soaring Profitability for Memory Makers: Micron reported a gross margin of 84.6% in its Q3 earnings, with revenue soaring 346% year-over-year. On a macro level, DRAM contract prices for Q1 2026 are expected to rise 93%-98% quarter-over-quarter, with average annual prices forecast to climb 88%.

Original｜Odaily Planet Daily (@OdailyChina)

Author｜Wenser (@wenser2010 )

Have you ever wondered how the profit from selling an iPhone is distributed among the component suppliers?

Recently, overseas tech blogger @BluthCapital, mocking Apple's business model behind the iPhone in the voice of Micron's CEO, said: "For over a decade, Apple has been buying chips from us (MU) for $5, putting them in a metal box, and selling them to consumers for $99. When we tried to raise the price to $7, they just laughed at us. But now, when we charge them $50, they raise the product price by $250." His words expressed contempt for Apple's recent price hikes, which they blamed on memory chip manufacturers.

The post quickly sparked discussions on social media. This morning, @BluthCapital continued the topic, sharing a cost structure chart for the iPhone 18 with specific figures to support his point:

Previously, in an interview with the Wall Street Journal, Micron's Chief Business Officer Sumit Sadana also stated, "During the memory industry downturn, some customers took advantage of the opportunity to drive down prices, resulting in negative profits for the company." Now, due to strong demand from the AI and tech industries, the memory sector has become the dominant force in negotiations. This has led to a complete reversal of fortunes along the entire supply chain.

Profit Structure of an iPhone: Apple Takes Nearly 25%, Micron and Other Memory Makers Get Less Than 3%

Estimates suggest that for each iPhone sold, Apple captures about a quarter of the profit, while memory giants only take about a thirtieth. TSMC, due to its monopoly position, takes around 4%-5% of the profit. The remainder covers other hardware suppliers, distribution channels, R&D, and taxes.

Looking Back at Apple's Financial Reports: Net Profit Margin Consistently Above 24%, Capturing 75% of Industry Profits

According to data from Counterpoint and other agencies, Apple has long held nearly 50% of the global mobile phone market's operating profit. IDC data for 2025 shows that with an 18% market share, Apple captured roughly 75% of the industry's total profits.

Based on Apple's latest Q2 2026 data, iPhone revenue was $57 billion, net profit was $34 billion, and estimated shipments were about 61 million units. Consequently, it can be calculated that Apple's net profit per iPhone is around $320-$340, with a net profit margin of 33%-36%.

Comparing financial data over the past five years clearly shows that iPhone revenue has remained relatively stable. Net profit has gradually increased from around $94 billion in 2021 to approximately $112 billion in 2025. The net profit margin has remained relatively steady, typically around 25%.

Looking at different models like the 2017 iPhone X, the 2023 iPhone 14 Pro, and the 2026 iPhone 17 series, the profit structure has undergone a series of changes due to varying memory costs.

From iPhone X to iPhone 17: Memory Costs Have Doubled

The role of memory costs in the iPhone has gone through three historical phases: from an initial "afterthought," to an "important component," and now to a "critical component."

2017 iPhone X Era: The 'Afterthought' Period for Memory

According to Counterpoint's teardown report from that year, Apple's net profit margin for the iPhone X was nearly 50%, benefiting from its long-standing brand advantage and dominant position in the ecosystem. The profit share for memory manufacturers like Samsung and SK hynix was only about 135–195 RMB, accounting for roughly 1.6%–2.3% of the total retail price of 8388 RMB.

This is the significance of "memory" in the iPhone X era: about 2% of the cost, making it arguably the component Apple cared least about.

2023 iPhone 14 Pro Era: The 'Important Component' Period for Memory

In 2023, with the launch of the iPhone 14 series, Apple's material costs increased slightly. For the Pro model, the BOM (Bill of Materials) cost reached around $464 (approximately 3170 RMB), accounting for nearly 40% of the selling price. However, Apple's net profit margin remained around 40%.

According to tech media reports at the time, the above data was for the 128GB version. While the cost increase for more expensive memory versions was not significant, the selling price was substantially higher. This period was marked by "price increases for cameras and processors." Consequently, the overall profit for the iPhone 14 Pro was 3.7% lower than the iPhone 13 Pro.

2026 iPhone 17 Era: The 'Critical Component' Period for Memory

Fast forward to 2025-2026, the iPhone 17 series has become Apple's flagship model. Memory costs have doubled compared to a few years ago and are now estimated to account for 12%-15% of the BOM cost, approximately $60-$80.

In summary, the following table shows the cost and memory cost percentages for iPhones across different periods.

It is worth noting that TrendForce data shows that in Q1 2026, contract prices for general-purpose DRAM surged by 93% to 98% quarter-over-quarter. Citi estimates that the average DRAM price for the full year 2026 will increase by 88%. This aligns with the overall trend of rising memory costs. This phenomenon has also drawn comments from Apple CEO Tim Cook and Elon Musk.

Tim Cook: Memory Price Hike is a Once-in-40-Years Phenomenon

On June 17, Apple CEO Tim Cook (Editor's Note from Odaily Planet Daily: He is set to step down as CEO this September and will be succeeded by John Ternus, former Senior Vice President of Hardware Engineering) mentioned the cost pressure from rising memory prices in an interview with the Wall Street Journal. He stated, "When consumers need devices, supply has decreased, and memory manufacturers are passing on significant price increase pressure. We absolutely need memory pricing and supply to return to reasonable levels for consumer products. That's the bottom line."

However, within less than a week, he quickly changed his tone.

On June 25, Cook again spoke to the Wall Street Journal, calling the cost impact a "once-in-a-century flood." He said, "In over 40 years, I have never seen anything like this in any field." Subsequently, Apple announced price increases across its entire product line, including Mac, iPad, HomePod, Apple TV, and Vision Pro.

Following the announcement, Apple's stock price fell by 6%, wiping out $263 billion in market value, marking its biggest drop since April 2025.

Elon Musk: I've Never Seen Anything Like This Either

Cook's comments resonated strongly with Elon Musk. Recently, Musk also posted, "Cook told the Wall Street Journal this cost surge is 'something he has never seen in any field in over 40 years.' Same here. This is the most intense price jump I've ever seen."

Thanks to AI Data Centers and HBM, the Memory Sector Finds Its Spine

Looking closely at the "memory bull market" that started last year, the key driver is the robust demand from the AI industry.

Industry estimates generally suggest that each AI server requires 8 times the DRAM and 3 times the NAND flash memory compared to a standard server.

Based on this market demand, the three major memory giants—Samsung, SK hynix, and Micron—naturally shift more advanced process capacity towards high-profit HBM (High Bandwidth Memory) and high-end DDR5 products, proactively cutting back on consumer-grade lines like DDR4. This leads to a shortage of general-purpose DRAM.

Public data shows that a single AI server requires 8 to 10 times the DRAM of a traditional server. Coupled with restocking needs for general-purpose servers and the demand from AI PC adoption, the supply-demand gap for memory chips continues to widen.

Micron's stunning Q3 gross margin of 84.6% and its revenue scale of $414.6 billion, a year-over-year increase of 346%, have showcased the immense profit-generating power of dominant memory manufacturers. Meanwhile, SK hynix recently announced plans for a US IPO, seeking to raise approximately $29 billion to further capitalize on memory demand.

It is no exaggeration to say that memory demand from the AI industry is squeezing, even cannibalizing, the memory supply for consumer electronics. Statistics indicate that the memory used in a single NVIDIA Vera Rubin AI server is equivalent to that in about 14,500 MacBook Neo laptops. This 1:14,500 ratio starkly illustrates the supply-demand imbalance for memory.

For memory manufacturers that have long suffered from price suppression by giants like Apple, this is their moment to shine. It's no wonder thatreports surfaced that Apple is actively lobbying the Trump administration for approval to purchase memory chips from Chinese chipmaker CXMT (ChangXin Memory Technologies).

As for whether CXMT can replicate the wealth-creation miracles of star companies like SK hynix and Micron in the capital markets, the answer may be revealed next month.