As memory prices soar, Apple launches a "price war"

Apple is turning a memory crisis that is sweeping the consumer electronics industry into a strategic opportunity to expand its market share.

According to Wallstreet News, Apple launched a series of entry-level products this week. The iPhone 17e starts at 4,499 yuan, consistent with the previous generation. The MacBook Neo notebook is priced at 4,599 yuan, lower than some analysts’ earlier expectations.

It is noteworthy that the memory and storage chip costs used in these devices continue to rise. According to Wallstreet News, Samsung's semiconductor division has doubled the price of LPDDR5X chips sold to Apple for the iPhone 17 series compared to before.

Samsung's semiconductor division originally aimed to raise the supply price for Apple by about 60%, starting negotiations with a 100% price increase as an initial offer in order to leave room for further bargaining. However, Apple accepted the offer on the spot, cementing the new price.

For competitors, the impact of this crisis will be far more severe than for Apple. Francisco Jeronimo, IDC’s Vice President of Research, stated:

Apple is entering attack mode, viewing the memory crisis as an opportunity to capture market share. All other smartphones in the same price range will face upward pricing pressure.

He added that this will give consumers the chance to switch from Android to iOS, and from Chromebook and PC to Mac.

IDC estimates that, due to soaring memory chip costs and supply shortages, global smartphone shipments will fall by 13% this year—marking the largest decline in history.

Driven by AI server demand, memory and storage chip prices have soared. Memory affects app operation speed, while storage determines local saving of photos, videos, and other files.

The impact is most concentrated among low-end Android devices. IDC notes that these products will face profitability challenges. PCs and Chromebooks are also under pressure; IDC predicts this market will see an 11% decline in shipments this year.

Mid-range models from Chinese smartphone brands such as Xiaomi, Oppo, and Honor will likely be forced to increase prices, while Apple's low-price strategy further narrows the price gap—especially significant in markets like China, Japan, and the US, where Apple offers a 24-month installment payment plan.

Additionally, after the success of the 16e in Japan and the US, the 17e is also expected to have strong growth potential in these markets.

However, Apple admits it, too, cannot remain entirely unaffected. In the company’s most recent earnings call, CEO Tim Cook said that Apple “sees market prices for memory rising significantly” and expects profitability to be more noticeably impacted starting this quarter.

Apple’s pricing strategy shows a clear offensive and defensive logic.

According to Wallstreet News, Apple’s current approach is to boost profits through flagship products, offsetting margin pressure from entry-level offerings. Notably, this week Apple simultaneously released the MacBook Pro with the M5 Max chip and the budget-friendly MacBook Neo.

This demonstrates Apple’s aim to expand both ends of its product line—retaining high-end buyers while also attracting first-time Mac users, those switching from Windows or Chromebook to Mac, and iPhone users who have never owned a Mac before.

Analysts point out that similar strategies may extend to the iPhone product line, and some iPhone 18 models, reportedly launching this fall, could face higher pricing.

Bernstein Research estimates that, due to rising costs of memory, storage, and processor chips, manufacturing costs for the iPhone 18 Pro Max will jump by 25%.