Foreign Media Reveals Apple's Aggressive Flash Pricing Tactics: Former Procurement Head Threatened SanDisk CEO to "Crawl Back on Knees"

IT News – 10 29: The Wall Street Journal reported yesterday that Apple previously used "gang-like" aggressive tactics to negotiate lower memory prices. These tactics included demanding extensive financial audits from suppliers, feigning indifference toward purchase volume commitments, and applying various forms of psychological pressure during negotiations. However, the tide has turned since DRAM and NAND prices began surging over the past two years. Apple's once-significant bargaining power appears to have vanished overnight. Memory suppliers, who were previously squeezed into submission, are now standing firm—and even seeking to apply the same pressure on Apple. Over recent months, Apple has publicly complained about exorbitant memory prices, citing skyrocketing component costs as justification for sharply raising product prices. However, Sumit Sadana, a senior advisor to Micron CEO, noted that long-term capacity shortages in the memory industry are partly to blame, especially for companies that aggressively drove down prices. He also pointed out that Micron's gross profit margins briefly turned negative several years ago because some customers exploited the downturn in the memory/storage sector to "take advantage," purchasing products at extremely low prices. The Wall Street Journal revealed that Apple requires flash suppliers to grant it "most-favored customer" status, ensuring it always receives the lowest possible prices. To enforce compliance, Apple continuously audits supplier accounts—so frequently that it successfully negotiated bulk audit discounts with Deloitte. This relentless auditing gives Apple direct insight into suppliers' operations and factory output, enabling its negotiators to accurately gauge how large an order a manufacturer needs to meet. Apple also leveraged this clause to initiate arbitration against Micron for selling NAND at lower prices to other clients, ultimately securing substantial compensation. To make matters worse, when flash market prices began falling, Apple sometimes rejected ordered storage chips, leaving suppliers with warehouses full of unsellable inventory that they were forced to sell off at rock-bottom prices. Apple's negotiation strategy is also notorious for its "tough" reputation. For instance, former Apple procurement head Tony Blevins would intentionally schedule meetings with different suppliers at the same time, forcing competitors to confront one another and intensifying mutual pressure. Apple executives would also extend high-intensity negotiations until midnight, often without providing dinner.