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Using Apple As An Indicator For The Memory Market

Using Apple As An Indicator For The Memory Market

Apple Inc. (NASDAQ: AAPL) is reportedly looking to prevent Western Digital Corp (NASDAQ: WDC) from acquiring Toshiba Corp's chip business by threatening not to buy its products, Reuters reported last week.

Apple currently uses Toshiba's NAND flash memory chips for its iPhone and is afraid of losing pricing power if Western Digital were to assume control of the chips business. Apple is also Toshiba's biggest customer and shutting out Western Digital "appears to be no small threat," BTIG's Edward Parker commented in a research report. In addition, Apple is "throwing its weight around" in such a notable way that suggests it sees higher sustained memory pricing as a real possibility.

One of the factors that makes Apple so profitable is its ability to monetize storage better than anyone else, the analyst continued. As such, Apple has lots of reason to care about the trajectory of memory pricing and the Cupertino-based company is "exerting its influence."


Nevertheless, even if Apple were to end up paying a higher price for memory products, the company's margins are "high enough that they'll be fine," Parker argued.

Bottom line, storage and memory technologies is a real "gravy train" for Apple and the company doesn't want it to end. Thankfully though, all members of Apple's supply chain "both revers and fears" the company.

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